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- Silver attracted some purchases on Friday, although there were no follow-up purchases.
- The setup favors bearish traders and supports the prospect of additional losses.
- A sustained break below the USD 22.50-45 area is required to reinforce the negative bias.
Silver gained positive traction on Friday and reversed the modest losses of the previous day, although there was a lack of strong follow-up buying. The commodity held gains for the first half of European session and was last traded around the $ 22.65 region, up over 0.60% for the day.
From a technical standpoint, the bullish rise after the FOMC on Wednesday struggled to gain acceptance above the round $ 23.00 mark. The subsequent pullback from the $ 23.15 area forms a bearish double top on the hourly charts and supports the prospect of further losses.
The negative outlook is compounded by the fact that the daily chart’s technical indicators are still deep in the bearish territory. Additionally, although the oscillators on the 4-hour chart have bounced back from lower levels, they have struggled to gain significant traction.
However, it is wise to wait for continued weakness below the USD 22.50-45 horizontal support before positioning yourself for further devaluation move. XAG / USD could then accelerate the slide back towards challenging YTD lows around the round number of USD 22.00 touched earlier this week.
On the flip side, any subsequent positive move could continue to meet stiff resistance near the $ 23.00 level and be limited near the $ 23.15 level. Any sustained move beyond that could trigger a short covering move and push XAG / USD towards the $ 23.70 area on its way to the $ 24.00 level.
Silver 4 hour chart
Technical levels to watch
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