Silver Price Analysis: XAG/USD eases from three-day tops, holds above 100-hour SMA

Silver gained traction for the second successive day and recovered further from the lowest level since November 2020, around the $22.00 mark touched on Monday. The metal climbed to three-day tops, around the $22.90 region during the first half of the trading action on Wednesday, though lacked bullish conviction.

Looking at the technical picture, the momentum pushed the XAG/USD through the $22.65-70 confluence hurdle, comprising of 100-hour SMA and the 23.6% Fibonacci level of the $24.87-$22.04 recent leg down. However, the intraday pullback from the vicinity of the $23.00 mark warrants caution for aggressive bullish traders.

Meanwhile, technical indicators on the daily chart are holding deep in the negative territory and have been losing positive traction on the 1-hourly chart. The set-up seems tilted in favour of bearish traders, which further makes it prudent to wait for some follow-through buying before positioning for any further gains.

From current levels, the $22.50 area could protect the immediate downside ahead of the overnight swing lows, around the $22.25-20 region. This is followed by the $22.00 round-figure mark (YTD lows), which if broken decisively will be seen as a fresh trigger for bearish traders and turn the XAG/USD vulnerable to slide further.

The next relevant support is pegged near September 2020 lows, around the $21.65 region, before the XAG/USD eventually drops to challenge the $21.00 mark for the first time since July 2020.

On the flip side, momentum beyond the $22.90 area is likely to confront stiff resistance near the 38.2% Fibo. level, around the $23.10 region. A sustained strength beyond might trigger a short-covering move and lift the XAG/USD towards the 50% Fibo., around the $23.45-50 region, en-route the $23.80-85 supply zone (61.8% Fibo.).

Silver 1-hour chart

Technical levels to watch