- Silver climbs to a one-week high on Wednesday, albeit lacks follow-through.
- The technical setup warrants some caution before placing fresh bullish bets.
- A sustained move beyond the $23.70-75 area would negate the bearish bias.
Silver attracts fresh buying following the previous day's two-way price moves and climbs to a one-week high, around the $23.50 area on Wednesday. The white metal, however, struggles to capitalize on the move or find acceptance above the 100-day Simple Moving Average (SMA) and retreats to the $23.30 region during the early North American session.
Oscillators on the daily chart, meanwhile, have been recovering from lower levels, though are still holding in the negative territory. Hence, any subsequent move up is more likely to confront stiff resistance near the $23.70-$23.75 area, or the 38.2% Fibonacci retracement level of the March-May rally. A sustained strength beyond the said barrier will suggest that the recent pullback from over a one-year high has run its course and shift the bias in favour of bullish traders.
The XAG/USD might then surpass the $24.00 round-figure mark and accelerate the momentum towards the next relevant hurdle near the $24.20-$24.25 region en route to the $24.50-$24.60 strong horizontal support breakpoint. The latter coincides with the 23.6% Fibo. level, above which a fresh bout of a short-covering should allow bullish traders to reclaim the $25.00 psychological mark. The upward trajectory could get extended towards the $25.30-$25.35 supply zone.
On the flip side, the 50% Fibo. level, just below the $23.00 round figure, now seems to protect the immediate downside ahead of the monthly low, around the $22.70-$22.65 region. Some follow-through selling will be seen as a fresh trigger for bearish traders and drag the XAG/USD below the 61.8% Fibo. level, around the $22.25 region, towards the $22.00 mark.
Silver daily chart
Key levels to watch
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