Silver Price Analysis: XAG/USD bulls retain control near multi-month peak, around $24.50
|- Silver edges higher for the third straight day and inches back closer to the multi-month top.
- Resistance from a key long-term trend line at the current highs could see kick back from technical sellers.
- A convincing break below the $24.50 mark would ideally be required to negate the near-term positive bias.
Silver prolongs the positive trend for the third straight day on Monday and steadily climbs back closer to its highest level since April 22 touched earlier this month. The white metal gives back some of its intraday gains heading into the European session after meeting tough resistance from a major trend line and a daily close above this line, at around $24.50 would provide the confirmation required to extend gains and begin a new bullish breakout phase.
From a technical perspective, oscillators on the daily chart are holding comfortably in the positive territory and are still not in the overbought zone suggesting more potential for upside, however, the 14-period Realtive Strength Index (RSI) which measures momentum is bearishly diverging bearishly with price action at the current peak when compared to the January 3 peak where it was much stronger, indicating underlying weakness in the latest run up.
On hourly charts RSI (14) hovers around the 70 mark (representing overbought conditions) and warrants some caution. Nevertheless, the stage still seems set for an eventual breakout through the $24.50-$24.55 region and a subsequent move towards reclaiming the $25.00 psychological mark for the first time since April 2022. Some follow-through buying has the potential to lift the XAG/USD to the $25.35-$25.40 hurdle.
On the flip side, the $24.10-$24.00 resistance breakpoint now seems to protect the immediate downside. Any further pullback is more likely to attract fresh buyers and remain limited near the 200-SMA on the 4-hour chart, currently around the $23.30-$23.25 area, also the lows of the current consolidation range. This is followed by the $23.00 round figure, which if broken decisively will negate the positive outlook and shift the near-term bias much more in favour of bearish traders.
The XAG/USD might then accelerate the fall towards the $22.60-$22.55 region and weaken further towards the next relevant support near the $22.10-$22.00 zone.
Silver 4-hour chart
Key levels to watch
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