- Silver regained positive traction on Thursday and inched back closer to weekly tops.
- The set-up still favours bearish traders and supports prospects for additional losses.
- A sustained break below the $25.70 confluence support will reaffirm the negative bias.
Silver added to its intraday gains and climbed to fresh daily tops during the early North American session. The commodity was last seen trading around the $26.10-15 region, with bulls now eyeing weekly tops set on Wednesday.
From a technical perspective, the XAG/USD, so far, has managed to defend a confluence support comprising of the very important 200-day SMA and the 61.8% Fibonacci level of the $23.78-$28.75 move up. This should act as a key pivotal point for short-term traders and help determine the next leg of a directional move for the white metal.
Meanwhile, technical indicators on the daily chart – though have recovered from lower levels – are still holding deep in the bearish territory. Given last week’s break below a symmetrical triangle, the technical set-up still seems tilted in favour of bearish traders and supports prospects for a further near-term depreciating move.
That said, traders are likely to wait for a sustained weakness below the mentioned confluence support, around the $25.70 region, before placing fresh bearish bets. The next relevant support is pegged near the $25.55 region before the XAG/USD eventually drops to the key $25.00 psychological mark en-route the $24.80 horizontal level.
Some follow-through selling would turn the XAG/USD vulnerable to extend the decline towards the $24.00 round-figure mark. The downward trajectory could eventually drag the white metal back towards YTD lows, around the $23.80-75 region touched in March.
On the flip side, the ongoing positive move is more likely to confront stiff resistance near the 50% Fibo. level, around the $26.25-30 region. Any subsequent strength might be seen as a selling opportunity and remain capped near the $26.55-60 supply zone. This is followed by the 38.2% Fibo. level, around the $26.85 region.
A sustained move beyond the latter is needed to negate the near-term negative bias and shift the bias back in favour of bullish traders.
XAG/USD daily chart
Technical levels to watch