On Jan. 14, 2021, XAGUSD hit a confluence zone where the pair reversed lower. The price hit an area where different market patterns and technical levels aligned, which allowed sellers to push silver lower. In the chart below, it is clearly visible that the price found resistance at the previous support zone (light blue), and it also respected the Dynamic Resistance 200MA (purple). Other bearish market patterns also terminated in this area.

The green bearish pattern triggered sell signals at the XA 1.27% Fib. retracement level, and the pink bearish pattern triggered sell signals at the XA 1.618% Fib. retracement level. Both the green and pink bearish patterns triggered sell signals in the Support/Resistance Zone and the 200MA Dynamic Resistance area.

The price pushed lower and could now be forming another bearish market pattern (blue). The blue bearish formation still needs the price to get below the XA 1.618%, but not break below the XA 2.24%. For the blue bearish pattern to be valid, the price needs to terminate in between these Fib. levels (XA 1.618-XA 2.24).

If the price terminates in between these levels and we get a reaction bounce higher, then expect sellers to be waiting at the BC 0.50% where point D of the blue bearish pattern terminates and triggers sell signals, which will also be near the next Support/Resistance zone. A move above the Jan. 14 high will invalidate the pattern, though a move below the XA 2.24% with no bounce could also invalidate the pattern.

The price does not need to bounce and XAGUSD can just continue lower. But if the pair does bounce from the proposed Fib. level area, you now know where the next possible sell signal area could occur with a target at 23.90. Only time will tell what silver will do.

XAGUSD One-Hour Chart For Jan. 17, 2021

Of course, like any strategy or technique, there will be times when the method fails, so proper money/risk management should always be used on every trade.