XAG / USD breaks a multi-month descending trend line barrier
- Silver rebounded to over 1 month highs during Tuesday’s early European session.
- The momentum appears strong enough to push XAG / USD past the USD 24.00 mark.
Silver received aggressive bids on Tuesday, shooting one-month highs around the $ 23.70 region during the early European session.
From a technical perspective, the XAG / USD showed some resilience below the 200-period SMA on the 4-hour chart and managed to defend the USD 23.00 level for the second year in a row on Monday. The positive move that followed confirmed the recent bullish breakout through an inverted head and shoulders neckline. This in turn supports the prospect of a further short-term appreciation movement.
Silver 4 hour chart
The constructive setup is reinforced by the fact that the technical indicators on the daily chart have only just begun to move into bullish territory and are nowhere near overbought. Bulls may now seek to build on the momentum beyond a downward trendline resistance stretching from the monthly swing highs in July around the $ 26.75-80 region.
Silver daily chart
Nonetheless, XAG / USD appears poised to resume its recent recovery move from the YTD lows and recapture the round number of USD 24.00. This is followed by resistance near the $ 24.15-20 region, above which momentum could expand further towards the next relevant hurdle around the $ 24.75-80 region. The white metal could eventually hit the key psychological mark of $ 25.00.
On the flip side, the $ 23.50 region now appears to be protecting the immediate downward move. Any subsequent pullback could still be seen as a buying opportunity near the $ 23.00 mark, which should provide a strong base for the XAG / USD in the short term and a major fulcrum for traders. A convincing break down could lead to technical selling and accelerate the corrective decline towards $ 22.75-70.