Overbought rally continues, RSI surpasses 74... "Adjustment signals become clearer"

$57.60 Breakthrough and Technical Warning Lights Turn On - CME Cooling Anomaly and Fed Rate Cut Expectations Drive Price Increase - Increasing Possibility of Correction to $51 Due to Overheating at the Top

The international silver(XAG/USD) market surged to $57.60 per ounce on Monday during Asian hours, reaching a record high. Two market sentiments have been at play following this sharp rise.

First, when Comex trading was temporarily halted due to the Chicago Mercantile Exchange(CME)'s cooling device issue, the market responded by buying, fearing a silver supply disruption. At the same time, expectations grew that the Fed would implement additional rate cuts at the December FOMC meeting, increasing the relative attractiveness of non-interest-bearing commodities. Lower interest rates reduce the opportunity cost of holding silver.

Technical indicators: RSI signals

Currently, XAG/USD is trading around $57.49, well above the 100-day exponential moving average(EMA) of $45.60, maintaining a clear upward trend.

However, the daily RSI has reached 73.47, surpassing the overbought threshold of 70. This indicates a short-term overheating condition and suggests that buying momentum is nearing its peak. When RSI reaches this level, profit-taking sell-offs are likely to occur, and a correction may be imminent.

The current price has broken through the upper Bollinger Band($56.37). If it reverts within the band, the first support level is expected near the band’s centerline(20-day moving average) at $51.29. If the correction deepens, the 100-day EMA($45.60) is likely to serve as the final defense line.

Industry analysts commented, “The upward momentum remains intact, but a period of correction to resolve RSI overbought conditions is likely before resuming the upward trend.” Therefore, short-term traders should watch the $51 support level carefully and proceed cautiously.