Is the breakthrough of the $55 resistance level an opportunity or a trap set by the supply zone? A technical analysis perspective

Silver(XAG/USD) surged to $54.45 during the Asian session on Friday but has since been pushed back by profit-taking, currently settling in the mid-$53 range. It has maintained an approximate 0.2% daily increase, and the weekly chart also shows a strong upward momentum.

Spot Perspective: Why $53 is a Support Level

Even if the price undergoes a correction, there is a high likelihood of buying demand at the psychological support level of $53.00. The immediate support is at $53.25, the low of the Asian session, which acts as the first line of defense. If this level is broken, the price could fall to the previous day’s low of $52.65. However, a drop below $52.00 would signal a potential short-term trend reversal.

Bullish Scenario: $55 Breakout as a Turning Point

If the buying force, which is essentially in control, can break through the resistance near $54.25, the next target would be the October previous high of $54.75. Going further, surpassing the psychological barrier of $55.00(round number) could serve as a strong signal of a new upward trend.

Technical Analysis: Significance of the $54.40–$54.50 Supply Zone

Technically, the $54.40–$54.50 range acts as a Supply Zone(. Repeated rejections at this level could create a ‘Multiple Top)’ pattern on the daily chart. Nevertheless, major momentum indicators still show a bullish bias(+ve territory), suggesting that the current phase is more likely a correction within an ongoing uptrend(Pullback).

Conclusion: If $53 holds as support from below, it presents an opportunity; if the price breaks above $55, it signals a potential bullish breakout. The outcome will depend on the price action in the coming days.