- Silver continues this week’s pullback and is down for the second day in a row.
- The setup favors the bears and supports the prospects for a further move lower.
- A sustained move above the $22.00 level is needed to nullify the short-term negative bias.
The price of silver (XAG/USD) has seen some selling for the second day in a row on Thursday and has extended this week’s retracement from the 50% Fibonacci drop from $23.24 to $20.46. The white metal has remained under pressure during the first half of the European session and is now trading around the $21.60 zone, losing 0.20% on the day.
Overall, the previous day’s drop confirmed the breakout of the lower end of an uptrend channel, which constituted the formation of a bearish flag pattern. Further weakness below the 50-period SMA on the 4-hour chart reinforces the negative setup and supports prospects for further losses.
Furthermore, the technical indicators on the daily chart remain in negative territory and have regained bearish traction on the 4-hour chart. Therefore, a pullback to the 23.6% Fibonacci test around the $21.15 region is possible on the way to the $21.00 level.
The move lower could extend further and allow the bears to re-challenge the low of the last few years, around the $20.45 region touched last week.
On the other hand, the Fibonacci 38.2% near the $21.55 area should now act as immediate resistance. Any further move higher is likely to face resistance near the previous day’s high around the $21.75 region. This is followed by the 50% Fibonacci barrier just ahead of the $22.00 level, which if breached could trigger a short-covering rally.
Silver 4 hour chart
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silver key levels
Source: Fx Street
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