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  • Silver shot to three-and-half month tops during the early part of the trading action on Tuesday.
  • Slightly overbought RSI on short-term charts held bulls from placing fresh bets and capped gains.
  • The technical set-up still supports prospects for an extension of the recent strong positive move.

Silver trimmed a part of its strong intraday gains to three-month tops and was last seen trading around mid-$28.00s, still up over 1.0% for the day.

Slightly overbought conditions on short-term charts seemed to be the only factor that capped gains for the XAG/USD. That said, the near-term bias remains tilted firmly in favour of bullish traders and supports prospects for additional gains.

The XAG/USD on Monday broke through a strong barrier near the $27.65-70 region, marking the 61.8% Fibonacci level of the $30.07-$23.78 downfall. The subsequent momentum pushed the metal beyond the $28.00 mark and ascending channel resistance.

The latter coincided with the $28.25-30 horizontal resistance and a sustained strength beyond was seen as a fresh trigger for bulls. This, in turn, has already set the stage for an extension of the recent strong move up from YTD lows touched on March 31.

From current levels, the next relevant resistance is pegged near the $29.00 round-figure mark, above which the momentum could further get extended towards the $29.30-35 region. Bulls might eventually aim back to reclaim the key $30.00 psychological mark.

On the flip side, the $28.30-25 resistance breakpoint should now protect the immediate downside. Any further decline might be seen as a buying opportunity near the $28.00 mark. This should help limit the downside near the 61.8% Fibo. level, around the $27.70-65 area.

XAG/USD daily chart

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Technical levels to watch

 

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