Silver Price Analysis: XAG/USD bounces off two-year low/ascending channel support
|- Silver lost ground for the fourth straight day and dropped to a nearly two-year low on Thursday.
- Spot prices managed to find some support near the lower end of a downward sloping channel.
- The set-up still favours bearish traders and supports prospects for a further depreciating move.
Silver witnessed selling for the fourth successive day on Thursday and dived to a nearly two-year low, around the $20.30 region during the early North American session.
The downward trajectory, however, stalled near the lower boundary of a downward sloping trend channel extending from the beginning of this month. The XAG/USD did attempt a minor recovery from the said support, though lacked any follow-through beyond the $20.70-$20.75 region.
Given the recent repeated failures to find acceptance above the 200-period SMA on the 4-hour chart, the descending channel supports prospects for further losses. The negative outlook is reinforced by bearish oscillators, which are still far from being in the oversold territory.
That said, bearish traders are likely to wait for a convincing break through the trend-channel support before placing fresh bets. The XAG/USD might then turn vulnerable to weaken further below the $20.00 psychological mark and test the next relevant support near the $19.60-$19.55 area.
On the flip side, any meaningful bounce could be seen as a selling opportunity and remain capped near the $21.00 mark. The said handle should act as a key pivotal point, which if cleared decisively might trigger a short-covering rally and lift the XAG/USD towards the $21.50 supply zone.
The latter marks a confluence barrier, comprising the top end of the ascending channel and the 200-period SMA on the 4-hour chart. Sustained strength beyond would negate any near-term negative bias and pave the way for some meaningful near-term upside for the XAG/USD.
Silver 4-hour chart
Key levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.