XAG/USD bounces back above $20.00, 50-DMA/50% Fibo. holds the key
- Silver regains traction on Monday, reversing much of Friday’s decline to over a week lows.
- The bulls still need to wait for a move above the $20.30-$35 confluence before placing aggressive bets.
- A convincing break below the $19.20 support zone would negate any positive outlook in the near term.
Silver attracts some dip buying near the $19.80 region on Monday and continues to recover from over a week lows set in the previous session. The white metal is building on its steady intraday climb during the early European session and has climbed back above the psychological $20.00 level in the last hour.
From a technical perspective, any subsequent upward move is more likely to meet stiff resistance and remain limited near the $20.30-$20.35 confluence. The said barrier consists of the 50-day SMA and the 50% Fibonacci retracement level of the $22.52 to $18.15 crash, which should act as a pivot.
Meanwhile, the oscillators on the daily chart are holding in the bullish territory and have started to regain positive traction on the hourly charts. This, in turn, supports the prospects for an eventual break above the above hurdle and a move towards the 61.8% Fibo. Level around the $20.85 area.
Some follow-up buying above the $21.00 level would be seen as a new trigger for bulls and pave the way for further moves towards the next relevant hurdle near the $21.40-$21.50 area. XAG/USD might eventually aim to reclaim the round figure of $22.00, coinciding with the 100-day SMA resistance.
On the other hand the 38.2% Fibo. The level around the $19.80-$19.75 region now appears to be protecting the immediate downside. Any further decline is more likely to stall and find support near Friday’s swing low around the $19.55 area, followed by the 23.6% Fibo. Level around the $19.20 zone.
A failure to defend the above support levels would shift the bias back in favor of bearish traders and leave the XAG/USD vulnerable to a weakening below the $19.00 level. The crash could then drag spot prices to the $18.40 support, around the $18.15 region touched on July 14, on the way to the YTD low.