- Silver gains some positive traction on Thursday, albeit lacks bullish conviction.
- The overnight breakdown through a multi-day-old trading range favours bears.
- Momentum back above the $23.00 mark could be seen as a selling opportunity.
Silver attracts some buyers during the Asian session on Thursday and reverses a part of the previous day's slide to over a three-week-low, though lacks follow-through and remains below the $23.00 mark.
From a technical perspective, the overnight decline below the $22.85-$22.80 horizontal support could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart are holding in the negative territory and are still far from being in the oversold zone. This, in turn, suggests that the path of least resistance for the XAG/USD is to the downside.
Hence, a subsequent slide back towards testing a strong horizontal support, near the $22.20-$22.10 zone, looks like a distinct possibility. This is followed by the $22.00 round-figure mark, which if broken decisively will pave the way for an extension of a multi-week-old descending trend and drag the XAG/USD to the next relevant support near the $21.25 region.
On the flip side, movement beyond the $23.00 mark now seems to confront stiff resistance near the $23.20 supply zone. Any further move up might be seen as a selling opportunity and remain capped near the 200-day Simple Moving Average (SMA), currently near the $23.45-$23.50 area. This is followed by the 100-day SMA barrier, around the $23.80 region, and the $24.00 mark.
A sustained strength beyond the aforementioned hurdles should negate the near-term negative outlook for the XAG/USD. The subsequent short-covering move has the potential to lift the white metal beyond the $24.30-$24.35 resistance, towards reclaiming the $25.00 psychological mark. The latter represents the August monthly swing high and should act as a pivotal point.
Silver daily chart
Technical levels to watch
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