- Silver was up on Monday and built on last week’s bounce from the $ 25.90 support zone.
- The setup appears tilted in favor of bullish traders and supports the prospects for additional earnings.
- A sustained break below the 100-period Simple Moving Average (SMA) on the 4-hour chart will negate the positive outlook.
Silver gained positive traction for the second session in a row on Monday and built on last week’s bounce from levels below $ 26.00, or the support marked by the 100-period SMA on the 4-hour chart. The commodity rose again above $ 27.00 and was last seen trading just below the $ 27.50-60 supply zone.
Meanwhile, the technical indicators on the daily chart maintained their bullish bias and again began to move into the positive territory on the 4-hour chart. The setup favors bullish traders and supports the prospects for an eventual breakout of the aforementioned barrier, although a stronger USD could limit gains.
That being said, a sustained move further will set the stage for additional gains and lift the XAG / USD towards $ 28.00. Some subsequent purchases should pave the way for an extension of the momentum. The commodity could then aim to break above the intermediate resistance at $ 28.20-30 and regain the $ 29.00 level.
On the other hand, the daily swing lows, around the $ 26.85 region, now appear to protect the immediate downside. This is followed by support near the $ 26.35 level before the 100-period SMA on the 4-hour chart, currently around the $ 26.10 zone. If you do not defend the mentioned support levels, the XAG / USD could become vulnerable.
The commodity could accelerate the decline further below last week’s lows around the $ 25.90 region to test the next relevant support near the key psychological mark of $ 25.00.
4 hour chart