Silver faces momentum decline: parallel trend framework faces testing

Technical Indicators Reveal Clues

Silver (XAG/USD) hovered around $36.20 during U.S. trading hours on Tuesday, with light trading volume. The most noteworthy point is that the Relative Strength Index (RSI) is oscillating around 57, indicating limited upward momentum. More concerning is that the Moving Average Convergence Divergence (MACD) has formed a bearish crossover, with the signal line reversing downward and the histogram showing clear convergence, suggesting that the upward driving force is waning.

Parallel Channel Structure Still Exists, but Vulnerability Is Evident

Since early April, silver has been trading within an ascending parallel channel, forming a pattern of higher highs and higher lows. Currently, the price repeatedly tests near the channel’s midpoint, with short-term support at around $35.50, coinciding with the lower boundary of the channel. The 21-day Exponential Moving Average (EMA) sits at $35.79, serving as a dynamic defensive line within the parallel framework.

However, the stability of this parallel structure is under pressure. After reaching a high in June, the metal has been stuck in a sideways consolidation, and the easing of geopolitical tensions has further weakened the bullish case. Bulls have struggled to break through the $36.50–$36.60 range, indicating that new buying momentum has yet to establish.

Support and Resistance Tug-of-War

Looking downward, if the price breaks below the lower boundary of the parallel channel at $35.50, the next support level is at $34.50. If that level is also breached, $33.50 comes into consideration. On the upside, bulls need to regain footing above $36.50 to reassert control, then challenge the higher zone of $37.00–$37.50.

It is worth noting that the longer lower shadow near $35.50 recently indicates active buying support at this level, which should not be underestimated from a technical perspective.

Market Outlook

Although the overall upward trend remains intact, waning momentum casts a shadow over the parallel channel. The metal urgently needs a new market catalyst to rekindle its rally; otherwise, consolidation may continue. From a technical standpoint, maintaining the lower boundary of the parallel channel is critical in the near term, as it will directly determine whether the market experiences a deep correction or prepares for a rebound.