Silver Price Analysis: XAG/USD recovers further from YTD low, climbs to $21.00 neighbourhood
|- Silver gained positive traction on Friday and reversed a part of the previous day’s slide to the YTD low.
- Extremely oversold RSI (14) on the daily chart was seen as a key factor that prompted short-covering.
- The double-bottom support breakpoint, near the $21.40 area, should now cap any meaningful upside.
Silver witnessed a short-covering bounce on the last day of the week and recovered a part of the overnight slump to its lowest level since July 2020. The recovery momentum extended through the early European session and pushed spot prices back closer to the $21.00 round-figure mark.
Given that RSI (14) on the daily chart is flashing extremely oversold conditions, traders opted to lighten their bearish bets around the XAG/USD amid modest US dollar pullback from a two-decade high. Ay meaningful upside, however, still seems elusive amid the risk-on impulse in the markets.
The overnight sustained below the double-bottom support near the $21.40 region was seen as a fresh trigger for bearish trades. This comes on the back of the recent breakdown through an ascending trend-line and suggests the attempted recovery runs the risk of fizzling out rather quickly.
Hence, any subsequent move up is more likely to confront stiff resistance and remain capped near the aforementioned support breakpoint, around the $21.40 area. That said, sustained strength beyond has the potential to lift the XAG/USD and allow bulls to reclaim the $22.00 round figure.
On the flip side, the YTD low, around the $20.65-$20.60 region, now seems to protect the immediate downside. Some follow-through selling would reaffirm the near-term negative bias and make the XAG/USD vulnerable to slide further towards challenging the $20.00 psychological mark.
Silver daily chart
Key levels to watch
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