- Silver is moving lower on Tuesday and is moving away from resistance from a week-old range.
- The technical setup favors the bears and supports the prospects for further weakness.
The price of silver (XAG / USD) encountered new selling on Tuesday and has fallen to an intraday low of $ 25.90 during the first half of the European session, although it has lacked a strong continuation.
The XAG / USD, so far, has managed to stay above a major confluence region comprising the very important 200-day SMA and the 61.8% Fibonacci move from $ 23.78 to $ 28.75. The mentioned support is near the $ 25.70-65 region, which should act as a crucial point for short-term investors.
Meanwhile, the XAG / USD has been swinging within a tight range for the last week or so. Price action constitutes the formation of a rectangle on short-term charts. Given the recent decline, the rectangle could be classified as a bearish consolidation phase and points to further weakness prospects.
The negative outlook is reinforced by the fact that the oscillators on the daily chart remain deep in bearish territory. That said, investors are likely to wait for a sustained break below the $ 25.70 support zone before opening new bearish positions and positioning themselves for an extension of recent losses.
The next relevant support is near the $ 25.55 region before the XAG / USD finally drops to the key psychological level of $ 25.00. Some continuation selling below the $ 24.80 region would make the white metal vulnerable to extend the slide towards the round $ 24.00 level, before targeting yearly lows around the $ 23.80-75 area touched in March.
On the other hand, the $ 26.20-30 resistance zone could continue to limit any attempt at a positive move. A sustained force above this region will mark a bullish break out of the recent trading range and trigger some short-hedging move. The XAG / USD could then look to build on the recent bounce and accelerate the positive move towards the $ 26.55-60 hurdle.
Momentum could extend further and lift XAG / USD towards the $ 26.85 region, or Fibonaaci’s 38.2% retracement. This is closely followed by the $ 27.00 level, above which the bulls could aim to test the 23.6% Fibonacci near $ 27.50.
Silver daily chart
Silver technical levels
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