- Silver failed to capitalize on the early uptick and faced rejection near the $26.00 mark.
- The set-up still favours bearish traders and supports prospects for additional weakness.
- A sustained move beyond the $26.25 region is needed to negate the bearish outlook.
Silver built on Friday’s goodish rebound from five-week lows and gained traction during the early part of the trading action on Monday. Bulls, however, struggled to capitalize on the move and the XAG/USD met with some fresh supply near the $26.00 mark. The mentioned level represents the 50% Fibonacci level of the $21.90-$30.07 strong move up and should now act as a key pivotal point for short-term traders.
Given last week’s decisive break below ascending trend-line support, the emergence of some fresh selling suggests that the near-term bearish trend might still be far from being over. The bearish bias is reinforced by the fact that oscillators on the daily chart have just started driving into the negative territory. Hence, a subsequent slide below the $25.00 mark, or the 61.8% Fibo. level remains a distinct possibility.
Some follow-through selling below Friday’s swing lows, around the $24.85-80 region, will be seen as a fresh trigger for bearish traders and pave the way for further near-term weakness. The XAG/USD might then turn vulnerable to accelerate the fall further towards challenging the very important 200-day SMA support, currently near the $24.00 mark. The $24.50-40 region might provide some intermediate support on the way down.
Meanwhile, any attempted recovery move might still be seen as a selling opportunity and runs the risk of fizzling out near the 50% Fibo. level. This is closely followed by the mentioned trend-line support breakpoint, around the $26.25 region, which should cap the upside for the XAG/USD. That said, a sustained strength beyond will negate the bearish bias and prompt some near-term short-covering around the white metal.
XAG/USD daily chart
Technical levels to watch
Share
