- Silver edged lower on Tuesday and move away from a one-week-old trading range resistance.
- The technical set-up favours bearish traders and supports prospects for additional weakness.
Silver witnessed some selling on Tuesday and touched an intraday low level of $25.90 during the first half of the European session, though lacked any strong follow-through.
The XAG/USD, so far, has managed to hold its neck above an important confluence region comprising of the very important 200-day SMA and the 61.8% Fibonacci level of the $23.78-$28.75 move up. The mentioned support is pegged near the $25.70-65 region, which should act as a key pivotal point for short-term traders.
Meanwhile, the XAG/USD has been oscillating in a narrow band over the past one week or so. The range-bound price action constitutes the formation of a rectangle on short-term charts. Given the recent slump, the rectangle might be categorized as a bearish consolidation phase and supports prospects for further weakness.
The negative outlook is reinforced by the fact that oscillators on the daily chart are holding deep in the bearish territory. That said, traders are likely to wait for a sustained break below the $25.70 support zone before placing fresh bearish bets and positioning for an extension of the hawkish FOMC-inspired losses.
The next relevant support is pegged near the $25.55 region before the XAG/USD eventually drops to the key $25.00 psychological mark. Some follow-through selling below the $24.80 region would turn the white metal vulnerable to extend the slide towards the $24.00 mark en-route YTD lows, around the $23.80-75 area touched in March.
On the flip side, the $26.20-30 supply zone might continue to cap any attempted positive move. A sustained strength beyond will mark a bullish breakout through the recent trading range and prompt some short-covering move. The XAG/USD might then look to build on the recent bounce and accelerate the positive move towards the $26.55-60 hurdle.
The momentum could further get extended and lift the XAG/USD towards the $26.85 region, or the 38.2% Fibo. level This is closely followed by the $27.00 mark, above which bulls might aim to test the 23.6% Fibo. level resistance near mid-$27.00s.
Silver daily chart
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Technical levels to watch
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