Silver Price Forecast: XAG/USD eases from multi-week top, flat lines around mid-$38.00s

• Silver struggles to build on modest Asian session gains to a multi-week top.
• A slightly overbought RSI on the 1-hour chart prompts some profit-taking.
• The constructive setup backs the case for the emergence of dip-buying.

Silver (XAG/USD) retreats slightly from a nearly three-week top touched during the Asian session on Thursday and is currently trading just above mid-$38.00s, up around 0.10% for the day. The US Dollar (USD) stages a modest recovery from its lowest level in over two weeks and turns out to be a key factor acting as a headwind for the USD-denominated commodity.

From a technical perspective, the pullback could be attributed to some profit-taking amid a slightly overbought Relative Strength Index (RSI) on the 1-hour chart. That said, Wednesday's breakout through a short-term descending trend-line resistance and a subsequent strength beyond the $38.40 horizontal barrier was seen as a key trigger for the XAG/USD bulls. Moreover, positive oscillators on the daily chart suggest that any meaningful corrective slide could be seen as a buying opportunity.

Hence, weakness below the $38.40 resistance-turned-support is more likely to be limited near the trend-line hurdle breakpoint, around the $38.10 region. Some follow-through selling and acceptance below the $38.00 mark, however, has the potential to drag the XAG/USD further towards mid-$37.00s en route to the $37.00 neighborhood. A convincing break below the latter might shift the bias in favor of bearish traders and set the stage for a further near-term depreciating move.

On the flip side, bulls might now wait for a move beyond the multi-week top, around the $38.75 region, before placing fresh bets. The XAG/USD might then aim to reclaim the $39.00 round-figure mark and then extend the positive momentum further towards challenging the $39.50 area, or the highest since February 2012, set last month.

Silver 1-hou chart