XAG/USD retests descending channel resistance, around $18.25 area

NEW YORK (Sept 7) Silver attracts some dip-buying near the $17.85 area, or the weekly low set earlier this Wednesday and rebounds, refreshing the daily peak during the early part of the European session. The white metal is currently placed near the $18.20-$18.25 region, still well below a one-week high touched the previous day.

The XAG/USD is currently flirting with a resistance marked by the top boundary of a downward sloping channel extending from the August monthly swing high. Sustained strength beyond will be seen as a fresh trigger for bullish traders and pave the way for some meaningful upside in the near term.

The XAG/USD might then accelerate the momentum towards the next relevant resistance, just ahead of the $19.00 round figure. The said handle coincides with the 100-period SMA on the 4-hour chart, which if cleared decisively will suggest that spot prices have formed a bottom near the $17.55 area.

Some follow-through buying has the potential to lift the XAG/USD towards the 200-period SMA on the 4-hour chart, currently pegged near the $19.40-$19.45 region. The recovery momentum could further get extended and allow bullish traders to aim back to reclaim the $20.00 psychological mark.

On the flip side, the $18.00 mark seems to act as immediate support ahead of the daily low, around the $17.85 region. Failure to defend the said support levels will expose the YTD low, around the $17.55 area touched last Thursday en-route to support from the ascending channel at around the $17.00 mark.

FXStreet