Silver Price Analysis: XAG/USD not out of the woods yet, consolidates below $20.00 mark

Silver failed to capitalize on Friday's goodish recovery move from a two-year low and witnessed subdued/range-bound price action on the first day of a new week. The XAG/USD remained confined in a narrow band through the early European session and was last seen trading around the $19.85-$19.80 area, down over 0.20% for the day.

Given Friday's convincing break below a one-month-old descending trend channel support, the near-term bias still seems tilted in favour of the XAG/USD bears. That said, RSI (14) on 4-hour/daily charts is flashing oversold conditions and warrants some caution before positioning for an extension of a nearly one-month-old descending trend.

The mixed technical set-up makes it prudent to wait for some near-term consolidation or modest rebound before the next leg down. Nevertheless, the XAG/USD remains vulnerable to retest the YTD low, around the $19.40-$19.35 region touched on Friday, and to prolong the depreciating move towards the next relevant support near the $19.00 mark.

On the flip side, any meaningful positive move beyond the $20.00 psychological mark might confront hurdles near the descending trend-channel support breakpoint, currently around the $20.25 region. The said area should now act as a pivotal point above which the XAG/USD could extend the recovery momentum towards the $20.55-$20.60 horizontal zone.

Some follow-through buying beyond the latter would negate the near-term bearish outlook and trigger a short-covering rally. The XAG/USD might then surpass the $21.00 mark and aim to challenge the $21.40-$21.45 confluence, comprising the top end of the aforementioned descending channel and the 200-period SMA on the 4-hour chart.

Silver 4-hour chart

Key levels to watch