Silver Price Analysis: XAG/USD bears have the upper hand, rising wedge breakdown in play
|- Silver gained some positive traction on Tuesday, albeit lacked any follow-through buying.
- Rising wedge breakdown favours bearish traders and supports prospects for further losses.
- Sustained strength beyond the $22.25 confluence is needed to negate the bearish outlook.
Silver attracted some dip-buying near the $21.65 area on Tuesday and refreshed its daily high during the first half of the European session. Bulls, however, struggled to capitalize on the move and spot prices remained below the $22.00 mark, warranting caution before positioning for any further gains.
From a technical perspective, the overnight rejection slide from the 61.8% Fibonacci retracement level of the $23.28-$20.46 downfall dragged the XAG/USD below an ascending trend line. This, along with another upward sloping trend line, constituted the formation of a bearish rising wedge pattern.
The aforementioned support breakpoint coincided with the 100-period SMA on the 4-hour chart and the 50% Fibo. level, which now seemed to cap the upside for the XAG/USD. Meanwhile, oscillators on the daily chart are holding in negative territory but are yet to confirm a bearish bias on hourly charts.
Nevertheless, the technical set-up favours bearish traders and supports prospects for further losses. The XAG/USD seems vulnerable to sliding back to test the 38.2% Fibo. level, around mid-$21.00s, before eventually dropping to the $21.30 area en-route the 23.6% Fibo. level, around the $21.10 region.
Some follow-through selling would expose the YTD low, around the $20.45 zone touched earlier this month. The downward trajectory could further get extended and allow bearish traders to challenge the $20.00 psychological mark.
On the flip side, momentum back above the $22.00 round figure might continue to confront stiff resistance near the $22.25 confluence. The said barrier represents 61.8% Fibo. level and the top boundary of the rising wedge, which if cleared decisively will negate any near-term negative bias.
Silver 4-hour chart
Key levels to watch
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