Silver builds on Friday’s modest bounce from the $21.20-$21.15 area, or its lowest level since November 29 and attracts some buyers on the first day of a new week. The intraday uptick, however, lacks bullish conviction and fails just ahead of the $22.00 round-figure mark.
From a technical perspective, the said handle represents the 100-day Simple Moving Average (SMA) support breakpoint. This is followed by the 38.2% Fibonacci retracement level of the recent rally from October 2022, around the $22.15 region. Any subsequent move up is more likely to meet with a fresh supply and remain capped near the $22.55-$22.60 resistance zone.
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The latter should act as a pivotal point, which if cleared decisively will negate any near-term bearish bias. The subsequent move up has the potential to lift the XAG/USD towards the $24.00 round-figure mark
en route to the $24.50 supply zone. Some follow-through buying will shift the bias back in favour of bullish traders and pave the way for additional gains.
On the flip side, the 50% Fibo. level, around the $21.35 area, seems to protect the immediate downside. This is followed by Friday’s swing low, around the $21.20-$20.15 region, nearing the 50% Fibo. level. A convincing break below the latter will be seen as a fresh trigger for bearish traders and make the XAG/USD vulnerable to weaken further below the $21.00 mark.
Given that technical indicators on the daily chart are holding deep in the negative territory, the white metal could eventually drop to 61.8% Fibo., around the $20.60 region. The downward trajectory could get extended further towards challenging the $20.00 psychological mark en route to the next relevant support near the $19.75-$19.70 horizontal zone.
