On Monday, silver gained positive traction for the third session in a row.
Any future rally could run into opposition near the 38.2 percent Fibo level.
Bullish traders should be cautious due to mixed technical signs on the daily chart.
On Monday, silver extended its post-NFP gains and rose for the second day in a row. During the first half of the European session, the white metal hit two-week highs, trading around $26.60-65.
The momentum could be attributable to some technical purchasing given Friday’s persistent surge past the $26.30 heavy supply zone, or the 50 percent Fibonacci level of the $23.78-$28.75 move up. This could have also set the way for a continuation of the current appreciating trend in the face of weaker USD demand.
Meanwhile, technical indicators on the daily chart have yet to show a bullish bias, despite the fact that they have recovered from negative territory. As a result, any future rally is more likely to run into stiff opposition and be limited near the 38.2 percent Fibo. level, which is around $26.85.
Then there’s the $27.00 barrier, above which a new round of short-covering might push the XAG/SUD further closer to the 23.6 percent Fibo. level hurdle at the mid-$27.00s.
The $26.30 resistance breakpoint (50 percent Fibo. level) on the other hand, has now become urgent support to defend ahead of the $26.00 barrier. A convincing breach below will favor bearish traders in the short term, making the XAG/USD vulnerable to a break through the $25.70 confluence support.
The 200-day SMA and the 61.8 percent Fibonacci level of the $23.78-$28.75 move up are both located in this region. A continuation of selling below the mid-$25.00s will reaffirm the negative picture and push the XAG/USD back towards the critical $25.00 psychological level./n
