Silver Price Analysis: XAGUSD Pulls Back From Its Multi-Month High and Falls Further Below $22.00

• Silver corrects from a fresh five-month high hit on Tuesday.
• Acceptance above the 200-day SMA supports prospects for further gains.
• A break below $21.00 is needed to nullify the positive outlook.

Silver retreats from the $22.25 zone, its highest level since July 7, hit earlier this Tuesday, and falls to a new daily low during the European mid-session. The white metal is currently trading just below the $22.00 signal, down more than 0.50% on the day.

With the RSI (14) holding close to overbought territory, the bulls seem inclined to take some profits after the recent recovery of around 18% from the monthly low hit on November 3rd. That being said, acceptance above the technically significant 200-day SMA for the first time since April supports the prospects for further appreciation in the near term.

Therefore, any further decline is more likely to find decent support and attract new buyers around the $21.45 (200 DMA) region. This should limit the fall of the XAGUSD near the $21.20 to $21.15 zone. This area is closely followed by the $21.00 signal, which if broken decisively will nullify the positive outlook and shift the bias in favor of the bears.

XAGUSD could then become vulnerable to weaken below the $21.00 signal – a strong breakout of horizontal resistance now turned support – and test the next relevant support near the $20.40 to $20.35 region. The corrective decline could extend further towards the psychological $20.00 signal, on the way to the $19.65-$19.60 zone and the $19.10-$19.00 support zone.

On the other hand, momentum above the $22.00 signal appears to be facing resistance near the daily high, around the $22.25 zone. Further sustained strength will reaffirm the constructive outlook and lift XAGUSD towards the $22.50-$22.60 bid zone. The bulls could try to recapture the round figure of $23.00 and test the $23.25 to $23.30 hurdle.

Silver daily chart

Key levels to watch