- Silver managed to recover a significant part of its initial lost ground to lows of more than a week.
- The short-term technical setup could have turned in favor of bearish traders.
- Sustained weakness below the $ 26.70 confluence is needed to confirm the negative bias.
At payment it drew some downside buying just before the confluence support at $ 25.70 and staged a modest intraday rebound from the week-long lows touched earlier this Thursday.
The XAG / USD it was last seen hovering near the upper end of its daily trading range, just above $ 26.00. The rally allowed the commodity to halt in this week’s retracement slide from the $ 26.75-80 resistance, or the 38.2% Fibonacci level of the $ 23.78 – $ 28.75 move up.
Meanwhile, the technical indicators on the daily chart, although they have been recovering from lower levels, are still in negative territory. This, along with the lack of strong follow-up buying, supports the prospects for a further short-term depreciation move.
That being said, the emergence of some lower level buying makes it prudent to wait for a convincing breakout through the $ 25.70 region before placing further bearish bets. This comprises the very important 200-day SMA and the 61.8% Fibonacci level, which should act as a key fundamental point.
Some follow-up selling below June’s monthly lows around $ 25.50 will reassert the bearish bias and make the XAG / USD vulnerable. The downward trajectory could extend and drag the white metal towards the challenge of the key psychological level of $ 25.00.
On the other hand, the static resistance at $ 26.25-30, coinciding with the 50% Fibonacci level, now appears to limit any significant upside before the $ 26.45-50 region. Sustained force beyond has the potential to lift XAG / USD towards the 38.2% Fibonacci level, around the $ 26.75-80 region.
The next relevant resistance is pegged near the $ 27.00 round mark, above which the XAG / USD could rally further towards the 23.6% fibonacci level, around $ 27.00.