- Silver drifts lower for the second straight day and drops to a near two-week trough.
- The technical setup favours bearish traders and supports prospects for further losses.
- A sustained strength beyond the 200-day SMA is needed to negate the negative bias.
Silver (XAG/USD) remains under some selling pressure for the second successive day on Monday and drops to a near two-week low, below mid-$22.00s during the first half of the European session.
From a technical perspective, the recent repeated failures ahead of the very important 200-day Simple Moving Average (SMA) and the subsequent downfall favour bearish traders. Moreover, oscillators on the daily chart have again started drifting in the negative territory and suggest that the path of least resistance for the XAG/USD is to the downside.
Hence, some follow-through decline towards retesting sub-$22.00 levels, or a two-month low touched in January, looks like a distinct possibility. The downward trajectory could get extended further towards the $21.40-$21.35 intermediate support before the XAG/USD breaks below the $21.00 mark, towards the October swing low near the $20.70-$20.65 zone.
On the flip side, any meaningful recovery attempt is likely to confront stiff resistance ahead of the $23.00 round-figure mark. This is followed by by the $23.25-$23.30 supply zone, which nears the 200-day SMA, which if cleared decisively should set the stage for additional gains and allow the XAG/USD to aim back towards reclaiming the $24.00 round figure.
Some follow-through buying has the potential to lift the XAG/USD towards the next relevant hurdle near the $24.50-$24.60 area and the $25.00 psychological mark. The momentum could get extended further and lift the white metal to the $25.45-$25.50 intermediate barrier en route to the $26.00 neighbourhood, or the December swing high.
Silver daily chart
Technical levels to watch
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