- Silver gained strong positive traction and spiked to the $23.00 level, or multi-day highs on Monday.
- The technical indicators on the daily chart warrant some caution before making aggressive bullish bets.
- A convincing break through the $23.40-$23.45 area is needed to support prospects for further gains.
silver (XAU) built on Friday’s bounce from the post-NFP low to the $22.00 zone, or a near one-month low, and gained strong positive traction on the first day of a new week. The positive intraday move pushed XAG prices close to the $23.00 round level during the early American session.
From a technical perspective, any further move beyond the mentioned level could face some resistance near the 100-day SMA, currently around the $23.20 area. This is followed by the horizontal barrier at $23.40-$23.45, which should act as a center point and help determine the short-term trend for XAG/USD.
The technical indicators on the daily chart, although they have been recovering from lower levels, have yet to confirm a bullish bias for XAG/USD. This makes it prudent to wait for strong follow-on buying before confirming that the recent steep rejection of the very important 200-day SMA has run its course.
A convincing advance of such barriers will negate any bearish bias and trigger a new short-covering move. This should allow XAG/USD to break above the $24.00 round figure mark and rise further to challenge the yearly high around the $24.70 zone reached on Jan 20th.
On the other hand, the $22.65 area now looks to protect the immediate downside ahead of the $22.40 region, which if broken would expose the $22.00 round figure. Sustained weakness below should pave the way for further decline and drag XAG/USD into a challenge of double bottom support around the $21.40 area.
silver daily chart
Technical levels
Source: Fx Street
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