Silver Price Analysis: XAG/USD recovers from two-week low, not out of the woods yet
- Silver regains some positive traction and snaps a three-day losing streak to a two-week low.
- The technical setup favours support prospects for the emergence of selling at higher levels.
- Any subsequent move up might still be seen as a selling opportunity and fizzle out quickly.
Silver attracts some buying on Friday and reverses a part of the previous day's losses to the $23.00 neighbourhood, or a two-week low. The white metal sticks to intraday gains, just below mid-$23.00s through the first half of the European session and for now, seems to have stalled this week's pullback from over an eight-month high.
The technical setup, however, still seems tilted in favour of bearish traders, warranting some caution before positioning for any further intraday positive move. This week's break below a two-month-old ascending trend line and a subsequent slide below the 200-period SMA on the 4-hour chart validates the negative outlook. Furthermore, oscillators on the daily chart have been losing momentum and support prospects for the emergence of fresh selling at higher levels.
Hence, any subsequent move up is more likely to meet with a fresh supply near the $23.70 area, or the 200-period SMA on the 4-hour chart. This, in turn, should cap the XAG/USD near the aforementioned ascending trend-line support breakpoint, now turned resistance, around the $23.90-$24.00 zone. The latter coincides with the overnight swing high and should act as a pivotal point, which if cleared decisively might prompt some short-covering around the white metal.
The XAG/USD might then aim to surpass an intermediate resistance near the $24.25 area, which is followed by the multi-month high, around the $24.50-$24.55 region set on Tuesday. A sustained strength beyond the latter will negate any near-term negative outlook and allow bulls to reclaim the $25.00 psychological mark for the first time since April 2022.
On the flip side, the $23.20-$23.10 area now seems to have emerged as immediate support. Some follow-through selling below the $23.00 round figure could drag the XAG/USD towards the $22.60-$22.55 region en route to the next relevant support near the $22.10-$22.00 horizontal zone. Failure to defend the said support levels will be seen as a fresh trigger for bearish traders and set the stage for a further near-term depreciating move.
Silver 4-hour chart
Key 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.
