Silver Price Analysis: XAG/USD recovers from multi-week lows, bearish potential intact
|- Silver stalled its recent downfall near the $25.00 mark, or 61.8% Fibo. level support.
- The set-up still favours bearish traders and supports prospects for further weakness.
- A move beyond the $26.00 confluence support breakpoint will negate the bearish bias.
Silver (XAG/USD) managed to find some support near the key $25.00 psychological mark on Friday and has now managed to recover its intraday losses to five-week lows. The mentioned level marks the 61.8% Fibonacci level of the $21.90-$30.07 strong move up and should now act as a key pivotal point for short-term traders.
Given the overnight break below a three-month-old ascending trend-line support, the near-term bias might have already shifted in favour of bearish traders. Moreover, technical indicators on the daily chart have been gaining negative momentum and add credence to the bearish outlook, supporting prospects for further near-term weakness.
A convincing break below the $25.00 mark will reaffirm the negative bias and turn the XAG/USD vulnerable to accelerate the corrective slide. The next relevant bearish target is pegged near the very important 200-day SMA, around the $24.00 mark, with some intermediate support near the $24.70 region ahead of the $24.00 horizontal level.
On the flip side, any meaningful recovery attempt might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly near the trend-line support breakpoint. The said support-turned-resistance, around the $26.00 mark, coincides with the 50% Fibo. level, which if cleared decisively might negate the bearish bias.
A fresh bout of short-covering might then push the XAG/USD back towards the $26.75-80 supply zone en-route the 38.2% Fibo. level, around the $27.00 round-figure mark.
XAG/USD daily chart
Technical levels to watch
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