XAG/USD stalls near 1-week low, looks vulnerable to further decline

  • Silver fell slightly for the second day in a row and fell back closer to a one-week low.
  • The setup remains tilted in favor of bearish traders and supports the outlook for further losses.
  • Sustained strength above the $22.00 mark is needed to nullify the negative near-term outlook.

Silver struggled to capitalize on yesterday’s late rebound from a week-long low and edged lower for the second straight day on Thursday. The white metal remained defensive at the start of the European session and was last seen trading around the $21.35-$21.30 region.

Given that XAG/USD repeatedly failed to find acceptance above the 200-period SMA on the 4-hour chart and was rejected near the $22.00 mark, the bias appears to be tilting in favor of bearish traders. The negative outlook is bolstered by the fact that the oscillators on the 4-hour/day charts have started to drift back into bearish territory.

Therefore, a further dip below the $21.00 mark, en route to the monthly low around the $20.90 region, now looks like a distinct possibility. The downward trajectory could expand further and take XAG/USD back to the year-to-date low around the $20.45 region established in May. The bears could then aim to challenge the psychological mark of $20.00.

On the other hand, the $21.50-$21.55 region now seems to have emerged as strong immediate resistance. Any significant rally attempted beyond the said barrier could be seen as a selling opportunity near the region of $21.75 (200-period SMA). This, in turn, should cap XAG/USD’s upside near the $21.90-$22.00 supply zone, at least for now.

The latter should act as a pivot point which, if decisively resolved, would negate the negative outlook and shift the bias in favor of bullish traders. XAG/USD could then accelerate the positive momentum towards intermediate resistance near the $22.30 area en route to the $22.50-$22.60 hurdle and the $23.00 mark.

Silver 4 hour chart

Key levels to monitor

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