- Silver struggled to preserve its early modest gains to four-day tops.
- Mixed technical indicators warrant some caution for bullish traders.
Silver edged higher through the first half of the trading action on Tuesday and shot to four-day tops, around the $26.35 region during the early European session. The momentum, however, lacked any follow-through and the commodity has now retreated to the lower end of its daily trading range.
The emergence of some dip-buying on Monday and the subsequent move up support prospects for additional gains. That said, bulls, so far, have struggled to find acceptance above the $26.30 strong resistance, which coincides with the 50% Fibonacci level of the $23.78-$28.75 move up.
Moreover, technical indicators on the daily chart are yet to confirm a bullish bias and warrants some caution before positioning for any further appreciating move. The technical set-up points to an extension of the recent range-bound price action ahead of Tuesday's release of the key US CPI report.
In the meantime, any subsequent move up is likely to confront some resistance near mid-$26.00s, which is followed by the $26.80 supply zone, also marking the 38.2% Fibo. level. A sustained strength beyond will negate any near-term negative bias and prompt some short-covering move.
The XAG/USD might then aim to surpass the $27.00 round-figure mark and accelerate the positive momentum further towards the 23.6% Fibo. level, around mid-$27.00s.
On the flip side, any downfall might continue to attract some buying near the $26.00-$25.90 region. The next relevant support is pegged near the $25.75-70 confluence region – comprising the very important 200-day SMA and the 61.8% Fibo. level – ahead of June swing lows, around mid-$25.00s.
Sustained weakness below will be seen as a fresh trigger for bearish traders and set the stage for an extension of last week's rejection slide from the vicinity of the 38.2% Fibo. level. The XAG/USD might then extend the downward trajectory further towards challenging the key $25.00 psychological mark.
Silver daily chart
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Technical levels to watch
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