- Silver lacked any firm directional bias and seesawed between tepid gains/minor losses.
- The technical set-up favours bearish traders and supports prospects for further downside.
- Sustained move beyond the $22.00 mark is needed to negate the near-term negative bias.
Silver struggled to gain any meaningful traction and oscillated in a narrow trading band for the second successive day on Wednesday. The XAG/USD was last seen trading around the $21.55-$21.60 region, down nearly 0.10% during the early North American session.
From a technical perspective, the recent bounce from the lowest level since July 2020 faltered near the 50% Fibonacci retracement level of the $23.24-$20.46 downfall. The subsequent slide confirmed a bearish break through the lower end of an ascending trend channel.
Given the recent slump, the aforementioned trend channel constitutes the formation of a bearish flag pattern. Moreover, oscillators on the daily chart are still holding deep in the negative territory, supporting prospects for a further near-term depreciating move.
That said, the lack of follow-through selling below the 38.2% Fibo. level warrants caution for bearish traders. Nevertheless, the XAG/USD still seems vulnerable to weakening further towards the 23.6% Fibo. level, around the $21.15 region, en-route the $21.00 mark.
On the flip side, any meaningful recovery now seems to confront stiff resistance and meet with a fresh supply near the $21.85 region, or the 50% Fibo. level. That said, some follow-through buying beyond the $22.00 mark trigger a fresh bout of a short-covering rally.
The XAG/USD might then surpass the 61.8% Fibo. level, around the $22.20 region and accelerate the momentum to the next relevant hurdle near the $22.55 area.
Silver 1-hour chart
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Key levels to watch
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