- Silver edged higher for the second straight session and moved further away from weekly lows.
- The set-up seems tilted in favour of bullish traders and supports prospects for additional gains.
- Sustained weakness below the $26.70 confluence support will negate the constructive outlook.
Silver reversed an intraday dip to the $26.80 region and is now looking to build on the overnight rebound from one-week lows. The white metal turned positive for the second straight session and shot to two-day tops, around the $27.30 region during the early European session.
Looking at the technical picture, the XAG/USD has been trending higher along an upward sloping channel extending from YTD lows, around the $23.80-75 region touched on March 31. The recent pullback from the $27.65-70 region stalled near the lower boundary of the mentioned channel.
The emergence of some dip-buying near the trend-channel support and the subsequent positive move favours bullish traders. That said, repeated failures near the 61.8% Fibonacci level of the $30.07-$23.78 downfall warrant some caution before positioning for any strong gains.
From current levels, any further positive move might continue to confront stiff resistance near the $27.65-70 region. A convincing breakthrough should push the XAG/USD beyond the $28.00 mark, towards challenging the trend-channel hurdle near the $28.25-30 supply zone.
On the flip side, weakness below the $27.00 mark is likely to be limited by the trend-channel support, around the $26.80 region. This coincides with 100-period SMA on the 4-hour chart, which if broken decisively will shift the near-term bias in favour of bearish traders.
The next relevant support is pegged near the $26.15-10 area (38.2% Fibo.), below which the XAG/USD might turn vulnerable to break below the $26.00 mark. This will eventually expose the $25.00 psychological mark, with some intermediate support near the $25.30-25 zone (23.6% Fibo.).
XAG/USD 4-hour chart
Technical levels to watch
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