- Silver extended the overnight pullback from the $22.50 supply zone and edged lower on Tuesday.
- The 23.6% Fibo helped limit the downside, with bulls showing resilience below the $22.00 mark.
- Sustained strength beyond the 38.2% Fibo. is needed to support prospects for any further upside.
Silver extended the previous day's retracement slide from a one-month high, around the $22.45-$22.50 supply zone and witnessed some follow-through selling on Tuesday. The white metal remained depressed through the early European session and was last seen flirting with the daily low, around the $22.00 round-figure mark.
Looking at the broader picture, the XAG/USD, so far, has been struggling to make it through the 200-period SMA resistance on the 4-hour chart. The mentioned barrier, currently around the $22.30 area, should act as a pivotal point, which if cleared might be seen as a trigger for bulls and pave the way for further gains.
The XAG/USD could then surpass the $22.50 resistance zone, which coincides with the 38.2% Fibonacci retracement level of the $26.22-$20.46 downfall. The momentum could then allow bulls to reclaim the $23.00 mark and lift spot prices further to the next relevant hurdle near the $23.30 region, or the 50% Fibo. level.
On the flip side, any subsequent fall is likely to find some support near the 23.6% Fibo. level, around the $21.80-$21.75 region. Some follow-through selling, leading to a convincing break below the $21.50 area, would make the XAG/USD vulnerable to testing the $21.00 mark with some intermediate support near the $21.30 zone. The downward trajectory could further get extended and expose the YTD low, around the $20.45 region touched on May 13.
Silver 4-hour chart
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Key levels to watch
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