XAG / USD seems vulnerable near 200-DMA / 61.8% Fibo. confluence
- Silver fell on Thursday and was last seen near the $ 28.80-85 confluence zone.
- The technical setup favors bearish traders and supports the prospect of further devaluation movement.
Silver struggled to benefit from the previous day’s good rebound from over two month lows and encountered some fresh supply on Tuesday. The commodity remained on the defensive during the first half of European trading hours, most recently hovering around the $ 28.80-85 region.
The mentioned area marks the confluence support, which consists of the very important 200-day SMA and the 61.8% Fibonacci level of the $ 23.78-28.75 upward move. This should now serve as an important fulcrum for short term traders and help determine the near term performance of the XAG / USD.
Given last week’s break below a symmetrical triangle, the short-term bias remains sloping in favor of bearish traders and supports the prospect of further short-term devaluation move. However, the daily chart’s RSI is about to break into oversold territory and requires some caution.
Hence, it is wise to wait for a short-term consolidation or a modest rebound before the next downtrend. Nonetheless, the XAG / USD remains vulnerable to further weakening below the overnight swing lows of around $ 25.55 and is aiming to break the key psychological level of $ 25.00.
The next relevant support is anchored near the USD 24.80 horizontal level, below which the XAG / USD could slide further towards the round USD 24.00 mark. The downtrend could eventually pull the white metal back towards YTD lows around the USD 23.80-75 region touched in March.
On the downside, any positive move above the $ 26.00 level is likely to encounter stiff resistance near the 50% Fibo. Levels roughly in the range of $ 26.25-30. Any subsequent strength could be viewed as a selling opportunity and remain limited near the supply zone of $ 26.55-60.
It is followed by the 38.2% Fibo. Level to the $ 26.85 region. A sustained move beyond the latter is required to negate the short term negative bias and provide significant momentum to bullish traders.
XAG / USD daily chart
Technical levels to watch