- Silver extends last week’s strong gains and gains traction for the third day in a row.
- The technical setup favors the bulls and supports the prospects for additional earnings.
- Sustained weakness below $ 27.00 is needed to negate the constructive outlook.
The price of silver (XAG / USD) has gained positive traction for the third day in a row and has risen to the highest level since February 25 during the early part of Monday’s trading action. The commodity now appears to have entered a bullish consolidation phase, trading at time of writing around the $ 27.80 region.
The mentioned area marks the 61.8% Fibonacci retracement of the fall from $ 30.07 to $ 23.78. This is followed by the round $ 28.00 level, which if decisively broken will be seen as a new trigger for the bulls and will pave the way for an extension of the recent rally from the yearly lows touched in March.
Meanwhile, the technical indicators on the daily chart have been moving higher in bullish territory and are still far from being in the overbought zone. This follows the recent break through the strong $ 26.60-50 resistance zone and supports the prospects for additional short-term gains.
That said, the slightly overbought RSI (14) on the 4-hour chart has prevented the bulls from opening aggressive positions and limited the rally, at least for now. However, the XAG / USD seems to be on the verge of breaking above the $ 28.00 round level and aiming to test the next relevant hurdle near the $ 28.80-85 resistance zone.
Momentum could extend further and allow bullish traders to aim towards recovering the $ 29.00 level for the first time since early February.
On the other hand, immediate support is now in the region of $ 27.40-35. Any subsequent decline could now be seen as an opportunity to initiate new bullish positions and remain capped near the $ 27.00 level. The latter coincides with the 50% Fibonacci level and should act as a key fundamental point.
Silver daily chart
Silver technical levels
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