#XAGUDT 4H: Silver is at the lower end of the range. Why am I looking for a rebound here?
First, let’s look at the chart.
On the 4-hour chart, silver has fallen all the way from around 65
to its current level, and is now moving back and forth within the 58.5–61.5 rectangle. This isn’t a one-way decline; it’s a range-bound market—the price is moving back and forth within the range, repeatedly testing both the upper and lower boundaries.
The price is now around 58.8, right at the lower boundary of the range.
My reasoning is simple:
The lower boundary is where buyers defend. The price has bounced back every time it reached this level before, which shows that buyers are stepping in here.
The stop-loss level is clear. If the price decisively breaks below 58.5, the bottom of the range, then the range structure will be broken, the bullish thesis will no longer hold, and I’ll admit I’m wrong and exit.
The targets are in the middle-to-upper part of the range. The first target is 60.5, and the second is around 61.5.
That’s what the blue arrow in the chart means: a recovery from the lower boundary toward the middle-to-upper part of the range.
Of course, the biggest mistake in a range-bound market is chasing the price in the middle. At this level, either wait for a confirmation signal before entering, or wait for a genuine break below the range before considering a reversal trade. I lean toward the former.
What do you think about silver at this level? Will it keep grinding within the range, or is it getting ready to pick a direction?