- Silver remained confined in a range around the $26.00 mark on the first day of a new trading week.
- The formation of a bearish flag chart pattern supports prospects for further near-term weakness.
- Mixed technical indicators warrant some caution before positioning for any meaningful downside.
Silver lacked any firm directional bias and seesawed between tepid gains/minor losses, around the $26.00 mark through the early European session.
Looking at the technical picture, the XAG/USD, so far, has managed to hold above the $25.75-70 confluence support. The mentioned region comprises 100-period EMA on the 4-hour chart and the lower boundary of a near four-week-old ascending channel.
Given the recent sharp pullback from the key $30.00 psychological mark, the upward sloping channel constitutes the formation of a bearish flag chart pattern. Sustained weakness below will mark a fresh breakdown and prompt some aggressive technical selling.
Meanwhile, technical indicators on hourly charts have drifting lower but are still holding in the bullish territory on the daily chart. This makes it prudent to wait for sustained weakness below the channel support before confirming a bearish breakdown.
A convincing breakthrough will turn the XAG/USD vulnerable to accelerate the fall towards the key $25.00 psychological mark en-route the $24.65-60 horizontal support. Some follow-through selling would allow bearish traders to challenge the $24.00 mark.
The downward trajectory could further get extended back towards YTD lows, around the $23.80-75 region touched on March 31, en-route the $23.20 support zone.
On the flip side, any meaningful positive move might continue to confront stiff resistance near the $26.60-65 region. This, in turn, should cap the XAG/USD near the trend-channel hurdle, currently near the $26.90 area. A sustained move beyond the $27.00 mark will negate the bearish outlook and prompt some short-covering move towards the $27.65-70 resistance zone.
XAG/USD 4-hour chart
Technical levels to watch