- Silver is struggling to hold onto its modest initial gains at four-day highs.
- Mixed technical indicators warrant some caution for the bulls.
Silver has moved higher during the first half of trading action on Tuesday and has soared to four-day highs around the $ 26.35 region at the start of the European session on Tuesday. However, the momentum has lacked any continuation and the white metal has retreated to the lower end of its daily trading range.
The appearance of some buying on Monday and the subsequent initial rally on Tuesday supports the prospects for additional earnings. With that said, the bulls, so far, have struggled to find acceptance above the stiff resistance at $ 26.30, which coincides with the 50% Fibonacci retracement of the move from $ 23.78 to $ 28.75.
Also, the technical indicators on the daily chart have yet to confirm a bullish bias and warrant some caution before positioning for any further bullish movement. The technical setup points to an extension of the recent limited price action in a range ahead of the release of the US CPI report on Tuesday.
Meanwhile, any subsequent move to the upside is likely to face some resistance near $ 26.50, which is followed by the $ 26.80 supply zone, where the 38.2% Fibonacci retracement is also located. A sustained force above this region will negate any negative short-term bias and trigger some short-hedging move.
The XAG / USD could then aim to break above the $ 27.00 level and accelerate the positive momentum towards Fibonacci 23.615, around the $ 27.50 level.
On the other hand, any drop could continue to attract some buying near the $ 26.00-$ 25.90 region. The next relevant soprote is near the $ 25.75-70 confluence region, comprising the very important 200-day SMA and the 61.8% Fibonacci, before targeting June lows around $ 25.50.
Sustained weakness below that region will be seen as a new trigger for the bears and will set the stage for an extension of last week’s rejection drop from near 38.2% Fibonacci. The XAG / USD could then extend the downward movement towards challenging the key psychological level of $ 25.00.
Silver daily chart
Silver technical levels
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