- Silver is struggling to capitalize on the positive move the day before and is moving lower on Tuesday.
- The formation of a bearish flag pattern supports the prospects for further weakness in the short term.
- The bullish technical indicators warrant some caution before positioning for any significant drops.
Silver (XAG / USD) is moving with a slight negative bias during the European session on Tuesday, although it has still managed to stay above the $ 26.00 level. At time of writing, the white metal is trading around the $ 26.15-20 region, shedding 0.15% on the day.
Looking at the technical picture, the XAG / USD, so far, has struggled to capitalize on the previous day’s bounce from near the confluence support of $ 25.75-70. The mentioned region comprises the 100-period EMA on the 4-hour chart and the lower bound of a nearly four-week rising channel. This should now act as a hot spot for short-term investors.
Meanwhile, the technical indicators on the daily chart have maintained their bullish bias and have again started to move into the positive territory on the 1-hour chart. This supports the prospects for additional short-term earnings. With that said, the technical setup remains tilted in favor of the bears and warrants some caution before positioning for any further bullish moves.
Given the recent sharp pullback from the key psychological level of $ 30.00, the upward sloping channel constitutes the formation of a bearish flag pattern. Therefore, any subsequent positive movement is more likely to face strong resistance near the $ 26.60-65 zone. This, in turn, should limit the XAG / USD near the trend channel barrier, currently near the round level of $ 27.00.
A sustained move above this region will mark a bullish breakout and nullify any short-term bearish outlook. The subsequent short hedging move has the potential to lift XAG / USD towards the $ 27.65-70 resistance zone.
On the other hand, the $ 25.75-70 region could continue to defend the immediate drop. A convincing break below this region could make XAG / USD vulnerable to accelerate the slide towards the key psychological level of $ 25.00 and on the way to the horizontal support of $ 24.65-60. Some subsequent selling would allow the bears to challenge the $ 24.00 level.
The downward movement could extend further towards the yearly lows, around the $ 23.80-75 region touched on March 31, on its way to the $ 23.20 support zone.
Silver 4 hour chart
Silver technical levels
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