- Silver attracts fresh buying near the 50 DMA and reverses a major part of the overnight losses.
- The technical set-up remains tilted in favour of bulls and supports prospects for further gains.
- A sustained break below the $20.00 mark is needed to negate the near-term positive outlook.
Silver shows some resilience below the 50% Fibonacci retracement level of the $22.52-$18.15 downfall and catches fresh bids near the $20.25 area, or the 50-day SMA support on Friday. The white metal jumps to a fresh daily high, around mid-$20.00s during the early North American session, reversing a major part of the previous day’s decline.
The emergence of fresh buying near a technically significant moving average suggests this week’s pullback from the 61.8% Fibo. level has run its course and favours bullish traders. The constructive outlook is reinforced by bullish technical indicators on the daily chart, which are still far from being in the overbought territory.
Hence, a subsequent strength towards retesting the weekly high, around the $20.85 region, now looks likely a distinct possibility. Some follow-through buying, leading to a move beyond the $21.00 round-figure mark, would be seen as a fresh trigger for bullish traders and pave the way for a further near-term appreciating move for the XAG/USD.
Spot prices could then accelerate the momentum towards the $21.40-$21.50 intermediate resistance, above which the XAG/USD could challenge the 100-day SMA, currently around the $21.85 region. This is closely followed by the $22.00 mark and should act as a strong hurdle.
On the flip side, the $20.35-$20.25 confluence comprises the 50% Fibo. level and the 50 DMA, which, in turn, should continue to protect the immediate downside. The next relevant support is pegged near the $20.00 psychological mark. The latter should now act as a key pivotal point, which if broken decisively would shift the bias in favour of bearish traders.
Silver daily chart
Key levels to watch
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