Silver Price Analysis: XAG/USD looks to build on intraday positive move, not out of the woods yet
NEW YORK (August 16) Silver gains some positive traction on Wednesday and builds on the previous day's late rebound from the $22.20 area, or a nearly two-month low. The white metal extends its steady intraday ascent through the early part of the European session and climbs to a fresh daily high, around the $22.65-$22.70 region in the last hour.
From a technical perspective, the intraday strength beyond the 100-hour Simple Moving Average (SMA) might have already set the stage for a further appreciating move. Moreover, oscillators on the 1-hour chart have been gaining positive traction and are still far from being in the overbought zone, validating the constructive outlook. That said, it will still be prudent to wait for strong follow-through buying before confirming that the XAG/USD has formed a near-term bottom.
Moreover, technical indicators on the daily chart are still holding deep in the bearish territory. Apart from this, the recent break below the very important 200-day SMA suggests that the attempted recovery might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly. Hence, any subsequent move up is more likely to confront stiff resistance near the $22.80-$22.85 region ahead of the $23.00 mark and the $23.25 region, or the 200-day SMA.
The latter should act as a key pivotal point, which if cleared might trigger a short-covering move and lift the XAG/USD to the $23.60-$23.65 horizontal barrier. Bulls might eventually aim to reclaim the $24.00 round figure.
On the flip side, the overnight swing low, around the $22.20 region, nearing the multi-month low, around the $22.15-$22.10 area touched in June, might continue to protect the immediate downside. Bearish traders might wait for some follow-through selling below the $22.00 mark before placing fresh bets. The XAG/USD might then accelerate the fall towards the $21.55-$21.50 area en route to the $21.00 round figure. The downward trajectory could get extended further towards intermediate support near the $20.60 area before Silver drops to the YTD low, or levels just below the $20.00 psychological mark touched in March.
FXStreet
