On Wednesday, silver drew new bids and surged to over one-week highs in the last hour.
A prolonged advance above $26.25-30 may have paved the way for even further gains.
The confluence support of $25.75-70 should now serve as a sturdy short-term basis for the metal.
During the early North American session, silver regained upward traction and rocketed to over one-week highs, closer to the mid-$26.00s. This was the third consecutive day of gains in the previous four, and the white metal decisively broke through the $26.25-30 supply zone.
The indicated resistance level coincided with the 50% Fibonacci level of the $23.78-$28.75 move up, and a sustained move over it could have already set the stage for more gains. The recent recurrent bounce from the $25.75-70 confluence region adds to the bullish view.
The latter includes the crucial 200-day SMA and the 61.8 percent Fibo. level, which should remain a critical pivotal point for short-term traders. The June swing lows, around the mid-$25.00s, will tilt the bias in favor of bearish traders if they are violated.
Meanwhile, any significant pullback towards the $26.00-$25.90 zone may continue to attract some buying. This could limit the downside near the $25.75-70 confluence support, which should provide as a firm basis for the XAG/USD in the short term.
Technical indicators on the daily chart, however, have rebounded from negative territory but have yet to show a positive bias. As a result, any following rally will be met with firm resistance near the $26.75-80 zone, or the monthly swing highs reached last week.
This is the 38.2 percent Fibo. level, which if forcefully cleared will open the door for a continuation of the current upward trend. The XAG/USD might then try to break through $27.00 and continue its upward trend towards the 23.6 percent Fibo. level in the mid-$27.00s./n
