- Silver saw fresh selling on Wednesday and broke the horizontal support at $21.50.
- The technical setup favors the bears and supports the prospects for an extension of the decline.
- Sustained strength beyond the $22.00 mark is needed to negate the short-term bearish outlook.
On Wednesday, the silver came under renewed selling pressure and broke below the $21.50-$21.45 support zone, which has held since the beginning of the current week. The intraday decline extended through the first half of the European session and dragged cash prices to a one-week low around the $21.25 area.
As XAG/USD has been struggling to find acceptance above the 200-period SMA on the 4-hour chart and has failed repeatedly ahead of the $22.00 mark, the drop favors bearish traders. The negative outlook is reinforced by the fact that the oscillators on the 4hr/daily charts have started drifting back into bearish territory again.
The technical set-up supports the prospects of a further short-term depreciation move and could drag XAG/USD back to the $21.00 zone on the way to the monthly low around the $20.90 zone. The bearish trajectory could extend towards the yearly low, around the $20.45 region, set in May, before the white metal falls to the psychological mark of $20.00.
On the other hand, any significant recovery attempts now appear to face stiff resistance near the $21.45-$21.50 horizontal support breakout point. A further move higher would be seen as a selling opportunity near the $21.75 region (200-period SMA). This, in turn, should limit XAG/USD’s rally near the $21.90-$22.00 high supply zone.
Silver 4 hour chart
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Technical levels
Source: Fx Street
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