XAG/USD bounces off 2-year low/ascending channel support
- Silver lost ground for the fourth straight day, falling to a nearly two-year low on Thursday.
- Spot prices managed to find some support at the bottom of a downward sloping channel.
- The setup still favors bearish traders and supports the prospects for further depreciation move.
Silver was sold for the fourth straight day on Thursday, falling to a nearly two-year low around the $20.30 region during the early North American session.
However, the downward movement stalled near the lower boundary of a downward sloping trend channel that has been stretching since earlier this month. The XAG/USD pair attempted a minor recovery from said support but failed to push past the $20.70 – $20.75 region.
Given the recent repeated failures to find acceptance above the 200-period SMA on the 4-hour chart, the descending channel supports the prospects for more losses. The negative outlook is being reinforced by bearish oscillators that are still far from being in oversold territory.
However, bearish traders are likely to wait for a convincing break of trend channel support before placing new bets. XAG/USD could then become vulnerable to continue falling below the psychological $20.00 level and test the next relevant support near the $19.60-$19.55 area.
On the upside, any significant bounce could be seen as a selling opportunity and remain limited near $21.00. The said handle should act as a key pivot that, if cleared decisively, could spark a short-covering rally and propel XAG/USD towards the $21.50 supply zone.
The latter marks a confluence barrier that includes the upper end of the ascending channel and the 200-period SMA on the 4-hour chart. Continued strength above that would negate any short-term negative bias and pave the way for significant short-term upside potential for XAG/USD.