XAG/USD is closing in on 50-DMA/50% Fibo. confluence hurdle

  • Silver adds to the modest overnight uptrend, rising for the second straight day.
  • The technical setup favors bulls and supports prospects for further appreciation.
  • A convincing break below the $19.20 area would shift the bias in favor of bearish traders.

Silver gains positive traction for the second straight day on Thursday, moving further away from a multi-day low around the $19.75 region touched the previous day. The intraday uptrend is gathering momentum in the first half of the European session, taking the white metal to a fresh daily high around the $20.20 region.

From a technical standpoint, any subsequent upward move is likely to face stiff resistance near the $20.30-$20.40 confluence. The said barrier consists of the 50% Fibonacci retracement level of the crash from $22.52 to $18.15 and the 50-day SMA. This should now act as a key fulcrum and help guide the near-term direction of XAG/USD.

Meanwhile, the oscillators on the daily chart are comfortably staying in positive territory and are gaining traction on the hourly charts. The technical setup supports the prospects for an eventual breakout through the confluence resistance mentioned above. The XAG/USD could then climb to the 61.8% Fibo. Levels around $20.85 area on the way to $21.00 level.

The momentum could extend further, lifting spot prices towards the next relevant hurdle near the $21.40-$21.50 area en route to the $22.00 round number. The latter coincides with the 100-day SMA which, if decisive, would be seen as a new trigger for bullish traders and pave the way for further short-term appreciation move.

On the other hand, the $19.80 to $19.75 region or the 38.2% Fibo. Plane now appears to act as an immediate support. Any subsequent decline is more likely to stall near the 23.6% Fibo. Levels around the $19.20 region. Some follow-up selling would suggest that the recovery from the YTD low has lost momentum and shift the bias in favor of bearish traders.

XAG/USD would then become vulnerable for further weakness below $19.00 and test the intermediate support at $18.50. Spot prices may eventually fall to challenge the YTD low around the $18.15 region hit on July 14th.

Silver daily chart

Important levels to see

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