Silver Price Analysis: XAG/USD bulls have the upper hand, descending channel breakout in play
|- Silver edges higher for the second straight day and climbs to over a one-week top on Tuesday.
- A descending trend-channel breakout supports prospects for a further appreciating move.
- A convincing break below the $18.00 mark is needed to negate the near-term positive outlook.
Silver gains traction for the second successive day on Thursday and climbs to a one-and-half-week high during the early European session. The white metal is currently trading around mid-$18.00s and seems poised to prolong the recent bounce from its lowest level since June 2020 touched last week.
The overnight strong move up pushed the XAG/USD beyond a resistance marked by the top end of an upward sloping channel extending from the August monthly swing high. This could be seen as a fresh trigger for bulls and suggests that spot prices have bottomed out, adding credence to the positive outlook.
Furthermore, technical indicators on hourly charts have just started moving in the positive territory, further supporting prospects for an extension of the appreciating move. Bulls, however, might wait for a move beyond the $18.75 area, or the 100-period SMA on the 4-hour chart, before placing fresh bets.
The XAG/USD could then easily surpass the $19.00 round-figure mark and accelerate the move towards the next relevant hurdle, around the $19.40 region. The latter coincides with the 200-period SMA on the 4-hour chart, which, in turn, should act as a key pivotal point for short-term traders.
On the flip side, immediate support is pegged near the $18.30-$18.25 region, which is closely followed by the descending channel resistance breakpoint and the $18.00 mark. A convincing break below might shift the bias back in favour of bearish traders and make the XAG/USD vulnerable again.
Silver 4-hour chart
Key levels to watch
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