Silver Price Analysis: XAG/USD hangs near YTD low, seems poised to decline further
- Silver adds to the overnight heavy losses and drops closer to a two-month low set in December.
- The technical setup favours bearish traders and supports prospects for further near-term losses.
- Any attempted recovery could get sold into and is likely to remain capped near the $23.50 area.
Silver (XAG/USD) remains under some selling pressure for the second successive day and slides back closer to the YTD trough during the first half of the European session on Wednesday. The white metal currently trades below the $22.00 round figure and seems to extend the depreciating move.
From a technical perspective, the recent repeated failures near the very important 200-day Simple Moving Average (SMA) and a subsequent slide validate the near-term negative outlook for the XAG/USD. Furthermore, oscillators on the daily chart are holding deep in the negative territory and are still away from being in the oversold zone. This, in turn, suggests that the path of least resistance for the white metal remains to the downside.
Meanwhile, some follow-through selling below the two-month low touched in December will expose the $21.40-$21.35 support. The XAG/USD could weaken further below the $21.00 mark and aim to retest the October swing low near the $20.70-$20.65 region.
On the flip side, any meaningful recovery attempt might now confront stiff resistance ahead of mid-$22.00s. A sustained strength beyond, however, might trigger a short-covering rally and allow the XAG/USD to reclaim the $23.00 round-figure mark. The momentum could extend towards the 200-day SMA, currently around the $23.20 area. This is followed by the $23.50 supply zone, which if cleared decisively will negate the negative outlook.
The XAG/USD might then aim to reclaim the $24.00 round figure and climb further towards the next relevant hurdle near the $24.50-$24.60 region en route to the $25.00 psychological mark.
Silver daily chart
Key technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
