- Silver edged higher on Wednesday and move away from two-and-half-month lows.
- The set-up still favours bearish traders and supports prospects for additional losses.
- A sustained move beyond the $26.20-30 hurdle is needed to negate the bearish bias.
Silver gained some positive traction on Wednesday and built on the overnight bounce from the vicinity of mid-$25.00s, or two-and-half-month lows. The uptick, however, lacked any bullish conviction and the commodity, so far, remained capped below the $26.00 round-figure mark.
The XAG/USD, so far, has been showing some resilience below an important confluence region comprising of the very important 200-day SMA and the 61.8% Fibonacci level of the $23.78-$28.75 move up. The mentioned support is pegged near the $25.70-65 region and is closely followed by the overnight swing lows, which if broken will set the stage for a further depreciating move.
Meanwhile, the commodity’s inability to capitalize on the attempted recovery move favours bearish traders. The negative outlook is reinforced by the fact that oscillators on the daily chart are holding deep in the bearish territory. Hence, any further move up might be seen as a selling opportunity and runs the risk of fizzling out quickly near the $26.20-30 supply zone.
From current levels, the $25.55-50 region might continue to protect the immediate downside. Sustained weakness below should pave the way for a fall towards the key $25.00 psychological mark. Some follow-through selling below the $24.80 region would turn the XAG/USD vulnerable to extend the slide towards the $24.00 mark en-route YTD lows, around the $23.80-75 area touched in March.
Conversely, a sustained strength beyond the $26.20-30 strong barrier will negate the bearish outlook and prompt some short-covering move. The XAG/USD might then accelerate the positive move towards the $26.55-60 hurdle before eventually climbing to the $26.85 region, or the 38.2% Fibo. level This is closely followed by the $27.00 mark, above which the next relevant hurdle is pegged near the 23.6% Fibo. level, around mid-$27.00s.
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