- Silver attracted some dip-buying on Monday and climbed back above the $26.00 mark.
- The recent price action now seemed to constitute the formation of a rectangle pattern.
- A sustained break through the trading range needed to confirm the near-term direction.
Silver managed to defend the $25.80-75 strong horizontal support and regained positive traction on the first day of a new trading week. The commodity maintained its bid tone through the first half of the European session and was last seen hovering around the $26.10-15 region.
Looking at the technical picture, the XAG/USD has been oscillating in a narrow trading band over the past two weeks or so. This constitutes the formation of a rectangle, which points to indecision over the near-term direction and warrants caution for aggressive traders.
Meanwhile, oscillators on the daily chart – though are holding in the bullish territory – have been struggling to gain any meaningful traction. This makes it prudent to wait for a sustained break through the mentioned range before positioning for the next leg of a directional move.
From current levels, any subsequent move beyond the $26.25 immediate hurdle might continue to confront stiff resistance near the $26.50-60 heavy supply zone. A sustained strength beyond will mark a bullish breakout and assist the XAG/USD to aim back to reclaim the $27.00 round figure.
On the flip side, the $25.80-75 region might continue to protect the immediate downside. Some follow-through selling will turn the XAG/USD vulnerable to accelerate the downfall towards the key $25.00 psychological mark en-route the $24.65-60 horizontal support.
Bearish traders might eventually drag the XAG/USD further towards the $24.00 mark. This is closely followed by YTD lows, around the $23.80-75 region touched on March 31, which if broken decisively will set the stage for a further near-term depreciating move.
XAG/USD 4-hour chart
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Technical levels to watch
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