- The price of silver remains near the two-year low reached on Friday.
- Friday’s breakout of a downtrend channel continues to favor the bears.
- RSI oversold on short-term charts warrants caution before positioning for further decline.
The price of silver has failed to capitalize on Friday’s nice recovery move from the two-year low and has seen moderate and range-bound price action on the first day of a new week. XAG/USD remains trapped in a tight range during the early part of the European session and is now trading around the $19.85-$19.80 zone.
Given Friday’s convincing break below the support of a month-old downtrend channel, the short-term bias still appears to be tilting in favor of the XAG/USD bears. That being said, the RSI (14) on the daily and 4hr charts shows oversold conditions and warrants some caution before positioning for an extension of the almost month long downtrend.
The mixed technical setup makes it prudent to wait for a short-term consolidation or modest rebound before the next move lower. However, XAG/USD remains vulnerable to retest the year’s low around the $19.40-$19.35 zone touched on Friday and prolong the depreciation move towards the next relevant support near $19.00.
On the other hand, any significant positive move beyond the psychological $20.00 level could face a hurdle near the downtrend channel support breakout point, currently around the $20.25 region. This zone should now act as a pivot point, above which XAG/USD could extend the recovery momentum towards the $20.55-$20.60 horizontal zone.
Continuation buying above the latter area would negate short-term bearish views and trigger a rally. XAG/USD could then break above the $21.00 level and try to challenge the $21.40-$21.45 confluence, which comprises the upper end of the aforementioned descending channel and the 200-period SMA on the 4-hour chart.
Silver 4 hour chart
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silver key levels
Source: Fx Street
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