Silver Price Analysis: XAG/USD clings to modest recovery gains around mid-$19.00s

Silver gained some positive traction on Thursday and built on the previous day's modest rebound from sub-$19.00 levels or a two-year low. The XAG/USD held on to its gains through the early North American session and was last seen trading near the daily high, just below the mid-$19.00s.

Given last week's convincing breakthrough a nearly one-month-old descending channel, the bias remains tilted in favour of bearish traders. That said, RSI (14) on the daily chart is still flashing oversold conditions and warrants some caution before positioning for any further losses.

This makes it prudent to wait for some near-term consolidation or a further recovery before the XAG/USD resumes its downward trajectory. Hence, any subsequent move up is more likely to remain capped near the descending channel support breakpoint, around the $20.00 psychological mark.

The said handle is followed by the weekly high, around the $20.20 region, which if cleared decisively would suggest that the XAG/USD has formed a near-term bottom and prompt some short-covering. Spot prices might then accelerate the recovery towards the $20.65 horizontal resistance.

On the flip side, the $19.25-$19.20 area now seems to protect the immediate downside ahead of the YTD low, around the $19.00-$18.90 region. Some follow-through selling would make the XAG/USD vulnerable to testing the $18.00 mark before eventually dropping to the $17.65 support zone.

Silver 4-hour chart

Key levels to watch