Silver (XAG/USD) Outlook: The selloff takes a break, but it is over?

Ben Graham · February 3

Metals are recovering after historic drops
Will the trend simply resume after the event or is it just the beginning?
Exploring Silver (XAG/USD) in-depth to spot where the action stands

Traders are still trying to grasp the impact of last Friday’s insane 7-sigma move in the metals market.

In hindsight, several forces combined to trigger the tumble.

First comes the inevitable gravity problem.

When trends turn too parabolic, wings get burned — and when they do, the fall is brutal.

Market makers and traders enter a psychological standoff over who will be left holding the hot potato. Between real demand and aggressive short sellers, whoever needs to buy ends up paying whatever price is required.

As a result, offers get lifted aggressively, market makers find themselves short, and hedging flows fuel spectacular upside spirals. But once enough supply finally appears, buyers stop paying up. When that happens, prices stop rising — and shortly after, everyone starts wondering why prices were there in the first place.

Silver (XAG/USD) Outlook: The selloff takes a break, but it is over? - ExpertFX School — 7-Sigma events in Markets are rare occurrences

What ultimately pushed offers lower was a combination of factors:

The end of a very strong seasonal trend for metals in January (when industrials typically place annual orders), exacerbated month-end profit-taking (with the preceding high profits generated), and finally the nomination of Kevin Warsh, which introduced fresh volatility.

Discover: The Fed Chair has been picked: Who is Kevin Warsh?

The reaction in the US dollar also matters here. The Fed Chair nomination seems to have restored some confidence — at least for now — helping to smooth out the most extreme market moves that were seen in early 2026.

Metals have since found temporary footing at key levels.

Gold stalled near $4,400, Platinum around $2,000, and Silver — today’s focus — came within a hair of $70 after a 41% drawdown.

In perspective, the correction merely dragged metals back to early-2026 price levels.

Silver is still up a sneaky 80% since November. This isn't nothing!

The lesson here is to be extra careful when 10% moves up and down become the norm; something will inevitably break.

Metals are still supported by a multitude of fundamental factors, including high government deficits, strong economic demand (and supply bottlenecks) and international turmoil – Don't expect prices to come back to 2025 lows, but prices could still be elevated.

Let’s now dive into a multi-timeframe, in-depth analysis of Silver (XAG/USD) to assess where today’s 11% rebound leaves price action — and whether a durable bottom is forming, or if more volatility lies ahead.

Silver (XAG/USD) Multi-timeframe Technical Analysis

Daily Chart

How significant is that Friday bar!

Silver had been evolving in a steep upward channel since November 2025 and has officially broken it to the downside.

Still, the extreme move lower saw some dip-buying right around its 50-Day Moving Average (currently at $75.92).

Now mean-reverting higher, bulls will face a quintessential test at the $89 to $92 Pivot Area – Failing to breach back above before the end of the week hints at Bull Failure and could lead to more downward action.

The RSI is showing a retest of the neutral level – moving back to above helps the rebound case but rejecting here would add further pressure.

Any close below the 50-Day MA could easily correct to $60 as not much volume has consolidated prices in between. Let's take a closer look.

4H Chart and Technical Levels

Prices breached back above the 4H 200-MA but it would be early to say that the rebound it decisive:

The RSI is now turning lower, sign of bull exhaustion and could confirm the current pullback being a Dead Cat Bounce
The past two 4H Candles have failed to breach $89, a micro-double top.
- Watch what happens if bears push prices back below the 4H 200-MA

Levels to watch for Silver (XAG/USD):

Resistance Levels:

Higher Timeframe Pivot $89 to $92 (immediate resistance)
Session highs $89.17
Channel retest $96.00
Key psychological resistance $100 to $104
$118 to $120 Current ATH Resistance

Support Levels:

2025 Record Mini-Pivot/Support $80 to $84
50-Day MA $75.90
Major 2026 Support $70 to $72
December FOMC Minor Support $58.00 to $60
$53.50 to $54 October Resistance now Major Support

1H Chart

Silver is showing signs of uncertainty on shorter timeframe as Buying momentum stalls.

And the best thing to do when uncertainty prevails is to make scenarios.

Holding the upward trendline would help to reach new session highs (further rise)
Rejecting here would test the $84 trend
- Breaking it offers further correction potential (look at the $71.20 lows)
- Rebounding from there hints at a more solid rebound (look at $96, Bull Channel retest)
Any break below the Monday open lows would point to a test of the $65 Point.

Safe Trades!

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