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- Silver is hovering in a narrow band and consolidating its recent gains at a multi-week high.
- The overnight break through the 50 DMA / $50 Fibo. confluence favors bullish traders.
- Any significant drop could now be seen as a buying opportunity and remain short-lived.
Silver consolidates yesterday’s strong gains to a six-week high and remains range bound above the $20.00 average heading into the North American session.
The overnight break through the confluence from $20.30 to $20.35 – comprising the 50-day SMA and the 50% Fibonacci retracement level of the drop from $22.52 to $18.15 – favors bullish traders. Positive technical indicators on the daily chart add credence to the constructive pattern and support the outlook for further near-term appreciation.
Hence, a further move towards the 61.8% Fibo. level, around the $20.85 area, now looks like a distinct possibility. Some follow-on buying above the $21.00 mark would be seen as a new trigger for the bulls and lift XAG/USD towards the intermediate resistance at $21.40-$21.50 en route to the low mark. $22.00.
The latter coincides with the 100-day SMA and should limit any further gains for XAG/USD, at least for now. That said, a convincing break above should pave the way for an extension of the recent recovery move from a two-year low, around the $18.15 region hit on July 14th.
On the flip side, the $20.35-$20.30 confluence resistance breakout now appears to be protecting the immediate downside ahead of the psychological $20.00 mark. This is closely followed by the $19.80-$19.75 region (38.2% Fibo level), Friday’s low around the $19.55 area and the 23.6% Fibo. level support, around the $19.20 area.
Failure to defend the aforementioned support levels would nullify any short-term positive bias and shift the bias in favor of bearish traders. XAG/USD would then become vulnerable to further weaken below $19.00, towards the next relevant support near the $18.40 area en route to the low since the start of the year, around from the region of $18.15.
Silver daily chart
Key levels to monitor
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