Silver Price Forecast: XAG/USD trades below $47.00, near its highest level since May 2011

• Silver extends its consolidative price move amid extremely overbought conditions.
• The range-bound price action could be seen as a brief pause before the next leg up.
• Weakness below the $46.60-$46.55 support might be seen as a buying opportunity.

Silver (XAG/USD) remains confined in a range near its highest level since May 2011, touched the previous day, and trades just below the $47.00 mark during the Asian session on Tuesday.

Against the backdrop of the recent blowout rally witnessed over the past month or so, the range-bound price action might still be categorized as a bullish consolidation phase. However, the daily Relative Strength Index (RSI) is flashing extremely overbought conditions and holding back the XAG/USD bulls from placing fresh bets. This, in turn, backs the case for a further near-term consolidation or a modest pullback before traders start positioning for the next leg up.

Meanwhile, any corrective pullback below the $46.60-$46.55 area, or the lower boundary of the trading range, could attract some buyers ahead of the $46.00 round figure and remain limited. A sustained break and acceptance below the said handle, however, might prompt technical selling and drag the XAG/USD further towards the $45.30-$45.25 horizontal support. This is followed by the $45.00 psychological mark, which, if broken, should pave the way for deeper losses.

On the flip side, the multi-year peak, around the $47.15-$47.20 region touched on Monday, could act as an immediate hurdle for the XAG/USD. A sustained strength beyond will be seen as a fresh trigger for bullish traders and pave the way for additional gains towards the $48.00 mark en route to the May 2011 swing high, around the $48.15-$48.20 region.

Silver 1-hour chart