Current trend

The XAG/USD pair is showing moderate gains, building on the fairly strong "bullish" momentum built late last week when the instrument held close to its March 13 record lows. Silver is testing 22.10, updating local highs from October 2.

Activity in the market remains low as traders are in no hurry to open new long positions ahead of today's publication of September consumer inflation statistics in the United States. Forecasts suggest a further slowdown in the Consumer Price Index from 3.7% to 3.6% in annual terms and from 0.6% to 0.3% in monthly terms, and Core CPI may adjust from 4.3% to 4.1%. If the forecasts come true, trading participants will strengthen their confidence that the US Federal Reserve will not raise borrowing costs this year. However, given the data on the Producer Price Index presented yesterday, there is reason to believe that the real dynamics of consumer inflation will be worse than expected, and therefore the likelihood of another increase in the interest rate by 25 basis points may again be the center of discussions.

In turn, the instrument is supported by lower yields on US Treasury bonds. The day before, the rate on ten-year securities dropped by 0.15% to 4.620%, and on thirty-year securities by 0.12% to 4.820%. The downward dynamics in the bond market is facilitated by the escalation of the military conflict in the Middle East, increasing the demand for safe assets.

Support and resistance

Bollinger Bands on the daily chart show a steady decline. The price range is narrowing, reflecting a sharp change of trend in the short term. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, having reached its highs, reversed into a horizontal plane, indicating overbought instrument in the ultra-short term.

Resistance levels: 22.21, 22.46, 22.70, 23.00.

Support levels: 22.00, 21.75, 21.50, 21.14.

Trading tips

Long positions can be opened after a breakout of 22.21 with the target of 22.70. Stop-loss — 22.00. Implementation time: 1-2 days.

A rebound from 22.21 as from resistance, followed by a breakdown of 22.00 may become a signal for opening of new short positions with the target at 21.50. Stop-loss — 22.21.