XAG/USD is hanging near the 1-week low, seems vulnerable for another slide
- Silver fell for the second straight day, falling back closer to a one-week low.
- The setup remains tilted in favor of bearish traders, supporting the prospects for more losses.
- Continued strength above the USD 22.00 level is needed to negate the near-term downside outlook.
Silver struggled to capitalize on the previous day’s late rebound from a weekly low, falling for a second straight day on Thursday. The white metal remained on the defensive during the early European session and was last seen trading in the $21.35-$21.30 range.
With XAG/USD repeatedly failing to find acceptance above the 200-period SMA on the 4-hour chart and encountering rejection near the $22.00 level, the bias appears to be tilted in favor of bearish traders to be. Adding to the negative outlook is the fact that the oscillators on the 4-hour/daily charts have started to drift back into bearish territory.
As such, a subsequent drop below the $21.00 level in the round number area on the way to the monthly lows around the $20.90 region now seems a definite possibility. The downside could extend further and pull the XAG/USD pair back towards the YTD lows around the $20.45 region set in May. Bears could then aim to challenge the psychological $20.00 level.
On the upside, the $21.50-$21.55 region now seems to be proving to be immediate strong resistance. Any meaningful recovery attempted above the said barrier could be seen as a selling opportunity near the $21.75 (200-period SMA) region. This, in turn, should limit the upside potential for XAG/USD near the $21.90-$22.00 supply zone, at least for now.
The latter should act as a linchpin that, if clarified decisively, would negate the negative outlook and shift the bias in favor of bullish traders. XAG/USD could then continue the positive momentum towards mid-range resistance near the $22.30 area on the way above the $22.50-$22.60 hurdle and the $23.00 round- accelerate brand.