- Silver seemed struggling to capitalize on its positive move beyond the $26.00 mark.
- A short-term ascending trend channel constitutes the formation of a bearish flag.
- Bullish technical indicators warrants caution before placing aggressive bearish bets.
Silver regained positive traction on Wednesday and inched back closer to the top end of its weekly trading range. The white metal was last seen hovering around the $26.00 mark, up 0.60% for the day.
Looking at the technical picture, the recent bounce from the $23.80-75 region, or YTD lows has been along an upward sloping channel. Given a sharp pullback from the key $30.00 psychological mark, the mentioned channel constitutes the formation of a bearish flag chart pattern.
Repeated failures near the trend-channel resistance, which coincides with the $26.30-35 supply zone, add credence to the bearish set-up. This, in turn, should now act as a key pivotal point for short-term traders and help determine the next leg of a directional move for the XAG/USD.
Meanwhile, technical indicators on hourly/daily charts are holding in the positive territory but have been struggling to gain any meaningful traction. However, it will still be prudent to wait for a sustained break below the channel support before placing fresh bearish bets.
The lower boundary of the channel is currently pegged near the $25.45 region and now coincides with 200-period SMA on the 4-hour chart. Sustained weakness below will confirm a bearish breakdown and set the stage for an accelerated decline towards the key $25.00 psychological mark.
Some follow-through selling below the $24.75-70 support would turn the XAG/USD vulnerable to slide further towards challenging the $24.00 mark. The downward trajectory could further get extended towards YTD lows, around the $23.80-75 region, en-route the $23.20 support zone.
On the flip side, a convincing break through the $26.30-35 strong barrier will negate any near-term bearish bias and prompt some aggressive short-covering move. The XAG/USD might then accelerate the move to reclaim the $27.00 mark before darting towards the $27.65-70 area.
Silver 4-hour chart
Technical levels to watch