Silver Price Analysis: Bulls Looking to Take Control Near 50% Fibonacci

• Silver reverses modest intraday decline to $20.00 zone.
• The technical set-up supports the prospects for additional short-term gains.
• The bulls could wait for the strength to hold beyond the 50-day SMA.

On Tuesday, the silver attracted some buying in the $20.15 to $20.10 area and came back close to the one-month high reached the previous day. The white metal is back above the 50% Fibonacci level of the drop from $22.52 to $18.15, although the bulls might wait for a sustained move beyond the 50-day SMA before placing further bets.

Technical indicators on the daily chart, meanwhile, remain comfortably in positive territory and have also broken out of overbought territory on the 4-hour chart. This, in turn, supports the prospects for an eventual breakout of the aforementioned barrier around $20.50 and a further short-term appreciation move.

XAG/USD could then aim to break above the 61.8% Fibonacci level, around the $20.85 region, and recapture the $21.00 round figure. The momentum could extend further and lift the pair towards the next relevant hurdle near the $21.40-$21.50 zone on the way to $22.00 and the 100-day SMA, currently around the $22.10-$22.15 region.

On the other hand, any significant decline could still find decent support ahead of the $20.00 psychological mark. Below is the 38.2% Fibonacci level, around the $19.80 region. Failure to defend such support levels would suggest that the recovery from last year’s low has run out and shift the bias in favor of bearish traders.

The ensuing decline has the potential to drag XAG/USD towards the 23.6% Fibonacci level, around the $19.15-$19.10 zone, heading towards the $19.00 mark. A little follow-through selling would expose the intermediate support at $18.50, below which the pair’s prices could drop further to retest the yearly low around the $18.15 region touched on July 14.

Silver Daily Chart

Technical levels