- Silver sold off sharply on Thursday and pulled back to a year’s low.
- The technical set-up supports the prospects for a further short-term depreciation move.
- Oversold oscillators suggest that the bears could briefly pause near the $18.15 area.
the silver extends the previous day’s pullback from the $19.10 area with some follow-up selling on Thursday. The bearish trajectory dragged the white metal down to the $18.30 zone, just short of a two-year low during the first half of the European session.
From a technical point of view, XAG/USD struggled to find acceptance above the 50-period SMA on the 4-hour chart on Wednesday. The subsequent slide below the intermediate support at $18.55 could be seen as a new trigger for the bears and supports the prospects for an extension of the more than one-month bearish path.
That said, the technical indicators on the daily chart are showing oversold conditions. This, in turn, suggests that any decline is more likely to find some support and stop near the low of a year ago around the $18.15 area touched last week. This is closely followed by $18.00, which if broken would reaffirm the negative bias.
XAG/USD could then accelerate the decline towards the intermediate support of $17.45-$17.40 heading towards $17.00. The downtrend could extend further and drag cash prices towards the next relevant support near the $16.70-$16.60 region.
On the other hand, the $18.55-$18.60 support breakout point now becomes a strong immediate hurdle. Any further recovery could be seen as a selling opportunity near the 50-period SMA on the 4hrs chart, currently around the $18.80 region. This, in turn, should cap XAG/USD near $19.00, which should now act as a pivot point.
Silver 4 hour chart
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Technical levels
Source: Fx Street
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