- Silver corrects from a fresh five-month high touched earlier this Tuesday.
- Acceptance above the 200-day SMA supports prospects for further gains.
- A break below the $21.00 mark is needed to negate the positive outlook.
Silver retreats from the $22.25 area, or its highest level since July 7 touched earlier this Tuesday and drops to a fresh daily low during the mid-European session. The white metal is currently trading just below the $22.00 round-figure mark, down over 0.50% for the day.
Given that RSI (14) remains close to overbought territory, bulls seem inclined to take some profits off the table following the recent rally of around 18% from the monthly low touched on November 3. That said, acceptance above a technically significant 200-day SMA for the first time since April supports prospects for a further near-term appreciating move.
Hence, any subsequent fall is more likely to find decent support and attract fresh buyers around the $21.45 region (200 DMA). This should limit the downside for the XAGUSD near the $21.20-$21.15 area. This is closely followed by the $21.00 mark, which if broken decisively will negate the positive outlook and shift the bias in favour of bearish traders.
The XAGUSD might then turn vulnerable to weaken below the $21.00 mark - a strong horizontal resistance breakpoint now turned support - and test the next relevant support near the $20.40-$20.35 region. The corrective slide could further get extended towards the $20.00 psychological mark en route to the $19.65-$19.60 zone and the $19.10-$19.00 support zone.
On the flip side, momentum back above the $22.00 mark now seems to confront resistance near the daily swing high, around the $22.25 region. A sustained strength beyond will reaffirm the constructive outlook and lift the XAGUSD towards the $22.50-$22.60 supply zone. Bulls might eventually aim to reclaim the $23.00 round figure and test the $23.25-$23.30 hurdle.
Silver daily chart
Key levels to watch
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