• Silver bulls pause for a breather after touching the highest level since September 2011.
• The overbought daily RSI makes it prudent to wait for some near-term consolidation.
• Any corrective decline might still be seen as a buying opportunity and remain limited.

Silver (XAG/USD) enters a bullish consolidation phase near its highest level since September 2011 and oscillates in a range, just above mid-$42.00s during the Asian session on Tuesday.

From a technical perspective, the recent strong move up witnessed over the past four weeks or so pauses near the top boundary of the month-to-date (MTD) ascending channel as traders opt to move to the sidelines ahead of the crucial FOMC policy meeting. Moreover, the overbought Relative Strength Index (RSI) on the daily chart further holds back the XAG/USD bulls from placing fresh bets.

This, in turn, makes it prudent to wait for an extension of the sideways consolidative price move or a modest pullback before the next leg up. That said, any corrective slide below Asian session low, around the $42.40-$42.35 zone, could be seen as a buying opportunity and limit losses for the XAG/USD near the $42.00 mark. A convincing break below, however, should pave the way for a deeper decline.

The subsequent fall could drag the white metal to the $41.40 confluence – comprising the lower boundary of the aforementioned channel and the 200-hour Simple Moving Average (SMA). A convincing break below would expose the $41.00 mark before the XAG/USD extends the corrective slide further towards the $40.80-$40.75 intermediate support en route to the $40.50-$40.45 region.

Meanwhile, bulls might now wait for a sustained move beyond the ascending channel resistance, currently pegged near the $42.75 region. This is followed by the $43.00 round figure, above which the XAG/USD could aim to challenge the September 2011 peak, around the $43.40 region, and climb further to the $44.00 round figure and the $44.25 region, or the August 2011 swing high.

Silver 1-hour chart