- Silver edges higher during the Asian session on Friday, albeit lacks follow-through.
- The range-bound price action could be categorized as a bearish consolidation phase.
- The oversold RSI on the daily chart might hold back bears from placing fresh bets.
Silver attracts some buyers during the Asian session on Friday and currently trades around the $21.00 mark, up nearly 0.20% for the day. The white metal, however, remains confined in a familiar range held over the past four days and the technical setup suggests that the path of least resistance is to the downside.
The subdued range-bound price action constitutes the formation of a rectangle on hourly charts. Against the backdrop of the recent sharp rejection slide from a technically significant 200-day Simple Moving Average (SMA), this might still be categorized as a bearish consolidation phase. This, along with last week's breakdown through the $23.30-$23.20 horizontal support, validates the near-term negative outlook for the XAG/USD.
That said, the oversold Relative Strength Index (RSI) on the daily chart is holding back traders from placing fresh bearish bets and positioning for any further depreciating move. Meanwhile, any subsequent move up might still be seen as a selling opportunity near the $21.40 region. A sustained strength beyond, however, might trigger a short-covering rally and allow the XAG/USD to reclaim the $22.00 round-figure mark.
The next relevant hurdle is pegged near the $22.20-$22.30 strong horizontal support breakpoint, which should now act as a key pivotal point for short-term traders. A sustained strength beyond will negate the negative outlook and shift the near-term bias in favour of bullish traders.
On the flip side, the $20.70-$20.65 zone, or a nearly seven-month low touched this week, might continue to act as immediate support and protect the downside. Some follow-through selling, however, should pave the way for a slide towards challenging the YTD trough – levels just below the $20.00 psychological mark touched in March.
Silver daily chart
Technical levels to watch
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