Silver Price Analysis: XAG/USD bears have the upper hand below $22.00 mark
|- Silver surrendered its modest intraday recovery gains and dropped back closer to the YTD low.
- The overnight break below the $22.00 mark might have already set the stage for further losses.
- Oversold RSU (14) on the daily chart warrants some caution before placing fresh bearish bets.
Silver struggled to capitalize on its modest intraday recovery move and retreated to the lower end of its daily trading range during the first half of the European session. The white metal was last seen hovering around the $21.80 region, just above the YTD low set the previous day.
Given that last week's post-FOMC bounce faltered near an ascending trend-line support breakpoint, the overnight sustained weakness below the $22.00 round figure favours bearish traders. That said, RSI (14) on the daily chart is already flashing oversold conditions and warrants caution.
Hence, it will be prudent to wait for some near-term consolidation or modest rebound before traders start positioning for an extension of a four-week-old bearish trajectory. The XAG/USD seem vulnerable to weakening further and retesting the December 2021 low, around the $21.40 region.
Some follow-through selling will be seen as a fresh trigger for bearish traders and set the stage for additional losses. The XAG/USD could then fall further towards the next relevant support near the $21.00 round figure before eventually dropping to the $20.00 psychological mark.
On the flip side, attempted recovery now seems to confront stiff resistance near the $22.00 support breakpoint. Any subsequent move up could be seen as a selling opportunity and runs the risk of fizzling out rather quickly near the $22.40-50 horizontal resistance.
That said, sustained strength beyond might trigger a short-covering move and push spot prices to the $23.00 mark en-route last week's high, around the $23.25-$23.30 region. The latter should act as a pivotal point, which if cleared would suggest that the XAG/USD has bottomed out.
Silver daily chart
Key levels to watch
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