During the first half of Tuesday’s European session, silver continued to rise.
Bullish traders will benefit from the technical setup, which promotes the possibility of further increases.
To contradict the bullish view, a persistent breach below $26.00 is required.
On Tuesday, silver extended its recent impressive rebound from the mid-$25.00s, or two-and-a-half-month lows, by gaining some traction. During the first half of the European session, the commodity rose to near three-week highs, hovering around $26.70.
The persistent surge past the $26.30 supply zone, or the 50% Fibonacci level of the $23.78-$28.75 move up, was considered as a crucial catalyst for optimistic traders following the NFP. This also seems to have prepared the way for a continuation of the upward trend.
The fact that technical indicators on the daily chart have entirely recovered from bearish area adds to the positive picture. As a result, despite a weaker US dollar, a rise beyond the 38.2 percent Fibo. level, around the $26.85 range, appears to be a distinct possibility.
The $27.00 mark is quickly followed by the previously described stumbling block. A fresh bout of short-covering might be triggered by some follow-through purchasing, pushing the XAG/SUD even higher towards the mid-$27.00s. The latter corresponds to the 23.6 percent Fibo. level and may act as a ceiling for the upswing.
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 the $25.70 confluence will change the near-term bias back in favor of bearish traders, making the XAG/USD vulnerable to a break below it.
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 bearish break and push the XAG/USD back towards the critical $25.00 psychological level./n
