Silver Price Analysis: XAG/USD corrects further from over two-month top, bullish bias remains

Silver (XAG/USD) extends Friday's retracement slide from the $24.15 region, or its highest level since September 4 and remains under some selling pressure on the first day of a new week. The white metal remains depressed through the early part of the European session and currently trades around the $23.65-$23.60 area, down nearly 0.50% for the day.

From a technical perspective, last week's breakout momentum through the very important 200-day Simple Moving Average (SMA) falters near a resistance marked by a downward sloping trend line extending from the May monthly swing high. The said barrier, currently around the $24.00 round figure, should now act as a key pivotal point for the XAG/USD and help determine the next leg of a directional move.

Oscillators on the daily chart, meanwhile, are holding in the positive territory and are still far from being in the overbought zone. This, in turn, suggests that the path of least resistance for the XAG/USD is to the upside and supports prospects for the emergence of some dip-buying at lower levels. Bulls, however, need to wait for acceptance above the $24.00 mark before placing fresh bets and positioning for further gains.

The XAG/USD might then aim to surpass the $24.20-$24.25 intermediate resistance and make a fresh attempt to conquer the $25.00 psychological mark. Some follow-through buying beyond the $25.15-$25.20 region should set the stage for a more towards reclaiming the $26.00 round figure for the first time since May.

On the flip side, the 200-day SMA, currently pegged near the $23.30 region, now seems to protect the immediate downside. Any further decline could be seen as a buying opportunity and remain limited near the $23.00 mark. That said, a convincing break below the latter might prompt aggressive technical selling and drag the XAG/USD further towards the $22.35-$22.30 zone en route to the $22.00 mark.

Silver daily chart

Technical levels to watch