- Silver comes under fresh selling pressure and reverses a part of the overnight gains.
- The technical setup favours bearish traders and supports prospects for further losses.
- A sustained move beyond the $22.20-$22.25 confluence will negate the negative bias.
Silver (XAG/USD) meets with some supply following an intraday uptick to the $22.80 region on Friday and erodes a part of the previous day's positive move to a multi-day peak. The intraday descent extends through the early part of the European session and drags the white metal to a fresh daily low, back closer to the mid-$22.00s in the last hour.
Looking at the broader picture, the recent failure to find acceptance above the very important 200-day Simple Moving Average (SMA) and a subsequent downfall favours bearish traders. Moreover, oscillators on the daily chart have just started gaining negative traction and suggest that the path of least resistance for the XAG/USD is to the downside.
Hence, some follow-through descent back towards testing the weekly low, around the $22.30-$22.25 area, en route to the sub-$22.00 level, or the two-month trough touched in January, looks like a distinct possibility. The downward trajectory could extend further and eventually drag the XAG/USD to the next relevant support near the $21.40-$21.35 region.
On the flip side, the daily swing high, around the $22.75-$22.80 zone, might continue to act as an immediate hurdle ahead of the $23.00 round figure. A sustained strength beyond the latter might trigger a short-covering rally, though is likely to attract fresh sellers and remain capped near the $23.20-$22.25 confluence, comprising the 100- and the 200-day SMAs.
This is followed by the monthly swing high, around mid-$23.00s, which if cleared decisively will negate any near-term negative outlook and shift the bias in favour of bullish traders. The XAG/USD might then aim to reclaim the $24.00 round figure and climb further towards the $24.30-$24.35 intermediate hurdle en route to the $24.50 supply zone.
Silver daily chart
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