- Silver gained bullish momentum for the third straight session on Monday.
- Any bullish move could face resistance near the Fibonacci retracement of 38.2%.
- Mixed technical indicators on the day chart warrant caution for bullish traders.
Silver extended the bullish run that began after Friday’s US jobs report and advanced for the second consecutive session on Monday. This also marked the third day of a positive move of the last four and pushed the white metal to two-week highs around $ 26.60-65 during the European session.
Given Friday’s sustained move beyond the $ 26.30 supply zone, or the 50% Fibonacci level of the $ 23.78-$ 28.75 move, the momentum could be attributed to some technical buying. It also contributed to the weakness of the dollar.
Meanwhile, the technical indicators on the day chart, while recovering from negative territory, have yet to confirm a bullish bias. Therefore, any subsequent bullish movement is more likely to face stiff resistance and remain capped near the 38.2% Fibonacci level, around the $ 26.85 region.
This is followed by $ 27.00, above which a new episode of short coverage has the potential to propel the XAG / SUD towards the Fibonacci retracement of 23.6% near $ 27.50.
On the other hand, the resistance break point of $ 26.30 (50% Fibonacci retracement) now turns into immediate support before $ 26.00. A convincing breakout below will turn the short-term bias to the downside and leave it vulnerable to a breakout of the $ 25.70 confluence zone.
The mentioned region comprises the very important 200-day SMA and the 61.8% Fibonacci level from the $ 23.78 rise to $ 28.75. Further lows below $ 25.50 will reaffirm the bearish outlook and drag the XAG / USD into a test to the key psychological zone of $ 25.00.
XAG / USD day chart
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