- Silver regains positive traction on Wednesday and recovers some of the decline overnight.
- The emergence of dip-buying favors bullish traders and supports the prospect of further gains.
- A convincing break through a multi-month descending trendline will reaffirm the positive bias.
Silver is attracting buying near the $19.25 region, or the 50-day SMA support on Wednesday and reversing part of the overnight retracement slide from a nearly four-week high. The white metal maintains its bid tone during the first half of the European session and is currently sitting just above the $19.00 average.
From a technical standpoint, the recent rally from the $17.55 area above a two-year low came to a halt near falling trendline resistance on Tuesday. The said barrier, currently set near the psychological mark of $20.00, extends from the May monthly high and should act as a pivot point. A convincing breakout will be seen as a new trigger for the bulls and pave the way for further gains.
Since the technical indicators on the daily chart have just started to move into bullish territory, XAG/USD could then rise to test the 100-day SMA near the $20.45 region. Some follow-on buying should allow spot prices to aim to reclaim the $21.00 mark. The momentum could still extend towards the next relevant hurdle, around the $21.50 area.
On the other hand, the $19.25 (50 DMA) region seems to have emerged as immediate strong support. This is closely followed by the $19.00 mark, which if breached could trigger technical selling around XAG/USD. The subsequent drop, however, could still be seen as a buying opportunity and remain limited near the $18.45-$18.40 support zone, which should serve as a strong base for the metal.
Silver daily chart
Key levels to monitor