- Silver loses ground for the fourth successive day and drops to a nearly two-week low.
- The technical set-up favours bearish traders and supports prospects for further losses.
- Attempted recoveries could now be seen as a selling opportunity and remain capped.
Silver extends its recent sharp pullback from the vicinity of the $21.00 mark, or a multi-week high and remains under some selling pressure for the fourth straight day on Thursday. The downward trajectory drags the white metal to the $19.60 area, back closer to the monthly low during the early part of the European session.
From a technical perspective, the XAG/USD earlier this week faced rejection near the 61.8% Fibonacci retracement level of the $22.52-$18.15 fall. The subsequent weakness below the 50-day SMA and the 38.2% Fibo. level of the July-August positive move could be seen as a fresh trigger for bearish traders, supporting prospects for further losses
The negative outlook is reinforced by the fact that oscillators on the daily chart have just started drifting into bearish territory. That said, it would still be prudent to wait for some follow-through selling below the monthly low, around the $19.55 area, which coincides with the 50% Fibo. before placing aggressive bearish bets.
The XAG/USD would then turn vulnerable and accelerate the fall towards the 61.8% Fibo. level, around the $19.20-$19.15 region, en route to the $19.00 mark. The downward trajectory could further get extended towards the $18.45-$18.40 area. Spot prices could eventually drop to the YTD low, around the $18.15 zone touched in July.
On the flip side, the 38.2% Fibo. level, around the $19.80-$19.85 region, now becomes an immediate strong barrier ahead of the $20.00 psychological mark. The latter nears the 50-day SMA, above which the XAG/USD could climb back to the $20.25 area (50% Fibo. level). Some follow-through buying could negate the bearish outlook.
Any subsequent move up, however, might still be seen as a selling opportunity around the $20.65 horizontal zone and remain capped near the monthly peak, around the $20.85 resistance zone. This is closely followed by the $21.00 round figure, which if cleared decisively should pave the way for some meaningful upside for the XAG/USD.
Silver daily chart
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Key levels to watch
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