Silver Price Analysis: XAG/USD bears have the upper hand, struggling near $21.00

• Silver struggled to preserve/capitalize on modest recovery gains from a one-month low.
• The technical setup favors the bears and supports the prospects for further losses.
• A sustained move beyond $22.00 is needed to negate the short-term negative bias.

XAG silver gave back much of its intraday gains and pulled back to the lower end of the daily trading range during the first half of the European session. The white metal last traded above the $21.00 mark, very close to the almost one-month low reached the previous day.

Given the overnight break of the 61.8% Fibonacci bounce level from $20.46 to $22.52, acceptance below the $21.00 level would be seen as a new trigger for bearish traders. Furthermore, the oscillators on the daily chart remain in the negative territory and are still far from being in the oversold zone.

The technical setup supports prospects for an extension of the recent decline from the $22.50 region, or a one-month high hit on June 6. Therefore, a further drop to challenge the one-year low, around the $20.45 zone touched on May 13, now looks like a distinct possibility amid the appearance of some dollar buying.

On the other hand, the daily swing high around the $21.35 and $21.40 area now appears to act as immediate resistance ahead of the 50% Fibonacci level. Any further move higher could be seen as a selling opportunity and it will remain capped near the $22.00 confluence hurdle, which comprises the 200-period SMA on the 4hrs chart and the 23.6% Fibonacci level.

That said, some follow-on buying would negate the short-term negative outlook and shift the bias in favor of bullish traders. XAG/USD could then break through intermediate resistance near the $22.30 area and test the $22.50-$22.60 supply zone.

4 hour chart

Technical levels