Silver struggled to hold onto its modest early advances to four-day highs.
Bullish traders should exercise cautious due to mixed technical indicators.
Silver rose steadily during the first half of Tuesday’s trade, reaching four-day highs in the $26.35 zone during the early European session. The commodity, however, has already returned to the lower end of its daily trading range due to a lack of follow-through on the momentum.
The emergence of some dip-buying on Monday, as well as the subsequent move higher, suggest the possibility of more increases. Bulls, on the other hand, have struggled to get acceptance above the significant resistance level of $26.30, which coincides with the 50% Fibonacci level of the $23.78-$28.75 rise higher.
Furthermore, technical indications on the daily chart have yet to show a positive tilt, implying prudence before committing to any additional upward movement. The technical setup suggests that the recent range-bound price action will be extended ahead of the release of the crucial US CPI report on Tuesday.
Meanwhile, any additional rally is anticipated to run into resistance near the mid-$26.00s, followed by the $26.80 supply zone, which also happens to be the 38.2 percent Fibo level. Any near-term bearish bias will be negated by persistent strength beyond that, prompting some short-covering.
The XAG/USD might then seek to break through the $27.00 round-figure threshold, accelerating the positive momentum even further towards the 23.6 percent Fibo. level, which is currently in the mid-$27.00s.
Any decline, on the other hand, may continue to attract some purchasing near the $26.00-$25.90 range. Prior to the June swing lows, in the mid-$25.00s, the next crucial support is located near the $25.75-70 confluence zone, which includes the highly important 200-day SMA and the 61.8 percent Fibo. level.
Sustained weakness below the 38.2 percent Fibo. level will be considered as a fresh trigger for bearish traders, setting the way for an extension of last week’s rejection drop. The XAG/USD might potentially continue its downward trend, challenging the important $25.00 psychological level./n
