Silver Price Analysis: XAG/USD bulls are in control near the 200-period SMA on the 4-hour chart

• Silver gains traction for the fourth day in a row and rises to a two-week high.
• The technical set-up favors bullish traders and supports prospects for further gains.
• A sustained break below the $18.60 area is needed to negate the positive outlook.

Silver (XAU/USD) extends its recent recovery move from the lowest level since June 2020 touched earlier this month and gains traction for the fourth day in a row on Monday. This also marks the sixth day of positive movement in the previous seven and lifts the white metal to more than a two-week high around the $19.30 zone during the first half of the European session.

Last week’s sustained break through the top of a nearly month-long descending channel and subsequent strength beyond the 100-period SMA on the 4-hour chart was seen as a key trigger for the bulls. Furthermore, the technical indicators on the daily chart have just started moving into positive territory and continue to support the strong follow-up move to the upside.

However, the RSI (14) on the hourly chart is already showing overbought conditions and could prevent traders from making further bullish bets on XAG/USD. Therefore, it is prudent to wait for a short-term consolidation or modest pullback before positioning for any further appreciation moves. The bias, meanwhile, still seems to lean heavily in favor of the bullish traders.

If silver manages to break above the 200-4-hour SMA at $20.30, it is likely to find stiff resistance at the trend line drawn from the April 2022 highs at $19.50 to $19.60. However, a break above that line would be key to consolidating a new, more uptrend, allowing XAG/USD to accelerate momentum towards the recovery of the psychological $20.00 mark and then the 50-day SMA around $20.50

On the other hand, the round figure of $19.00 seems to protect the immediate downside. Any further pullback could be seen as a buying opportunity and remain capped near the 100-period SMA on the 4hrs chart, around the $18.65-$18.60 area. This is followed by support near the $18.30 area. A convincing break below the latter will negate the positive short-term trend.

Silver 4 hour chart

Technical levels