- Silver caught fresh bids near the $24.50 resistance breakpoint, now turned support.
- The set-up seems tilted in favour of bulls and supports prospects for further gains.
- A sustained break below the $24.00 mark is needed to negate the positive outlook.
Silver attracted fresh buying near mid-$24.00s on the first day of a new week and climbed back closer to the key $25.00 psychological mark during the early part of the European session.
From a technical perspective, the recent pullback from over a three-month high has been along a downward sloping channel. Against the backdrop of a strong from a 14-month low touched in September, the mentioned channel constitutes the formation of a bullish flag pattern on short-term charts.
The positive outlook is reinforced by the fact that technical indicators on the daily chart – though have been losing momentum – are still holding comfortably in the bullish territory. Adding to this, the emergence of dip-buying near a strong horizontal resistance breakpoint favours bullish traders.
Silver 4-hour chart
This, along with the formation of an ascending channel on the daily chart, supports prospects for the resumption of the prior/well-established uptrend witnessed over the past two months or so. Some follow-through buying will reaffirm the constructive setup and pave the way for additional gains.
Silver daily chart
The XAG/USD might then accelerate the move back towards testing the $25.35-40 region, or the highest level since August 5 set earlier this month. The momentum could push the white metal beyond the $25.60 intermediate resistance and allow bulls to reclaim the $26.00 round-figure mark.
On the flip side, the $24.50 region resistance breakpoint, now turned support, should continue to protect the immediate downside. This is followed by the $24.10-$24.00 confluence, comprising of 100-day SMA and the lower end of the ascending channel, which if broken will negate the positive bias.
Levels to watch
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