- Silver struggled to gain meaningful traction and remained below the $19.00 level.
- Mixed oscillators on hourly/daily charts warrant some caution for aggressive traders.
- Strength past the mid-$19.00 would indicate that XAG/USD has bottomed.
Silver failed to capitalize on a good overnight rebound from the $18.25 area or a multi-day low and remained below the $19.00 level during Friday’s early European session.
Continued strength above the above level could trigger a fresh round of short covering and lift the XAG/USD towards the $19.40-$19.50 strong horizontal resistance. Some follow-on buying would suggest that the white metal has formed a near-term base and pave the way for a meaningful recovery from a two-year low hit last week.
XAG/USD could then aim to reclaim the psychological $20.00 level. The momentum could extend further, pushing spot prices to the next relevant barrier near the $20.55-$20.60 region. The latter marks a strong horizontal support break point and should act as a pivot that, if decisively breached, would set the stage for additional gains.
Meanwhile, positive technical indicators on hourly charts support prospects for some intraday gains. However, the daily chart’s oscillators are still deeply in negative territory. This, in turn, justifies some caution for aggressive bullish traders and suggests that any significant move higher could lead to fresh selling at higher levels.
On the upside, the $18.50 horizontal zone now appears to be protecting the immediate downside ahead of the overnight swing low around the $18.25 region. It is closely followed by the YTD low around the $18.15 area and the $18.00 level. A convincing break below the latter would leave XAG/USD vulnerable to a continuation of the recent move lower.
The subsequent decline has the potential to pull spot prices towards the $17.45-$17.40 interim support on the way to the $17.00 round number. The bearish trend might extend further and XAG/USD might eventually drop to test the next relevant support near the $16.70-$16.60 region.
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