XAG/USD seems poised to challenge 200 DMA just ahead of $22.00

  • Silver is higher on Thursday despite a lack of follow-up buying.
  • The setup favors bullish traders and supports the prospects for further gains.
  • Any drop towards the $20.00 level could still be seen as a buying opportunity.

Silver remains in a slightly positive bias for the first half of Thursday’s trading and is currently hovering around the $20.75-$20.80 region, up over 0.40% for the day.

Given the recent breakout of a several-month-old descending trendline hurdle and a sustained move above the 100-day SMA, the bias remains tilted in favor of bullish traders. The latter helped limit the intraweek pullback from the highest level since late June and the subsequent rebound lends credence to the positive near-term outlook.

Furthermore, the technical indicators on the daily chart are comfortably staying in the bullish territory and are far from being in the overbought territory. This, in turn, supports the prospects for an extension of the recent rally below $18.00 and a return above $21.00 towards a retest of the monthly high near the $21.25 region.

Some follow-up buying has the potential to lift XAG/USD towards a technically significant 200-day SMA, which currently stands just above the $22.00 round number. Said handle should serve as a fulcrum for short-term traders which, if decisively cleared, would set the stage for further short-term appreciation move.

On the downside, the overnight low around the $20.35 region may now protect the immediate downside ahead of the $20.00 (100 DMA) level. Any further decline could be viewed as a buying opportunity and remain limited near the descending trendline resistance breakout, around the $19.55 area, which coincides with the 50-day SMA.

Silver daily chart

Important levels to see

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