The Downward Trend Of Silver Could Get Extended Further
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- Silver remains confined in a narrow trading band below the $22.00 mark, or the 100-day SMA.
- The technical setup favours bearish traders and supports prospects for a further near-term fall.
- A sustained strength beyond the 38.2% Fibo. level will negate the bearish bias for the XAG/USD.
Silver struggles to gain any meaningful traction on Wednesday and oscillates in a narrow trading range through the early European session. The white metal remains below the $22.00 round-figure mark and the technical setup still seems tilted in favour of bearish traders.
The aforementioned handle coincides with the 100-day Simple Moving Average (SMA) and keeps a lid on the recovery from the YTD low, around the $21.20-$21.15 region touched last Friday. Moreover, oscillators on the daily chart are holding deep in the bearish territory and add credence to the near-term negative outlook. This, in turn, suggests that the path of least resistance for the XAG/USD is to the downside.
That said, some follow-through buying beyond the 38.2% Fibonacci retracement level of the recent rally from October 2022, around the $22.15 zone, could negate the bearish bias and prompt some short-covering rally. The XAG/USD might then accelerate the momentum towards the $22.55-$22.60 supply zone, en route to the $23.00 mark, or the 61.8% Fibo. level, which could cap any further positive move.
On the flip side, the 50% Fibo. level, around the $21.35 area, now seems to act as immediate support ahead of Friday's swing low, around the $21.20-$21.15 zone. A convincing break below the $21.00 mark could drag the XAG/USD towards the $20.60 region. The downward trajectory could get extended further towards the $20.00 psychological mark and the next relevant support near the $19.75-$19.70 zone.
Silver daily chart
