- Silver regained positive traction on Monday and rose to a fresh multi-week high.
- Acceptance above the 61.8% Fibonacci level supports prospects for a further appreciation move.
- Sustained weakness below $25.00 is needed to nullify the positive outlook.
the silver attracted fresh buying on Monday and built on its recent bounce from near the very important 200-day SMA. This marked the seventh day of positive movement in the previous eight and took prices of the pair to a six-week high around the $25.90-$25.95 region during the first half of the European session.
From a technical perspective, XAG/USD now appears to have found acceptance above the 61.8% Fibonacci retracement level of the $26.95-$23.97 decline. Furthermore, the technical indicators on the daily chart have been gaining positive traction and are still far from overbought territory, which, in turn, favors the bulls.
That being said, traders are likely to wait for some follow-up buying beyond the $26.00 round figure mark before confirming a breakout to the upside and positioning themselves for additional short-term gains. XAG/USD could be poised to test intermediate resistance near the $26.40 zone en route to a yearly high approaching $27.00.
On the other hand, any significant drop now seems to find decent support near the 50% Fibonacci level, around the $25.50-$25.45 area. This is followed by the low of the previous session, around the $25.25 area, before the 38.2% Fibonacci level, around the $25.00 psychological level, which should act as a pivotal point.
A convincing break below would trigger some technical selling and drag XAG/USD towards the 23.6% Fibonacci level, around the $24.65 region. The next relevant support is pegged near the $24.30 region, below which the drop could extend into a technically significant 200 DMA around $24.00.
4 hour chart
Technical levels
Source: Fx Street
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