Silver Price Analysis: XAG/USD remains vulnerable, break below 50% Fibo. level awaited
NEW YORK (Feb 23) Silver attracts some buyers on Thursday and reverses a part of the previous day's rejection slide from a technically significant 100-day Simple Moving Average (SMA) around the $22.00 mark. The white metal sticks to its gains through the early European session and currently trades around the $21.65-$21.70 area, up around 0.80% for the day.
Looking at the broader picture, the XAG/USD has been oscillating in a familiar range over the past week or so, forming a rectangle on the daily chart. Against the backdrop of the recent pullback from the $24.65 area, or the highest level since April 2022, the rectangle could now be categorized as a bearish consolidation phase. Moreover, oscillators on the daily chart are holding deep in the negative zone and are still far from being in the oversold territory.
The aforementioned technical setup suggests that the path of least resistance for the XAG/USD is to the downside. That said, bearish traders are more likely to wait for a convincing break below the 50% Fibonacci retracement level of the recent rally from October 2022 before placing aggressive bets. Some follow-through selling below the monthly low, around the $22.20-$22.15 area, will reaffirm the negative bias and pave the way for deeper losses.
The XAG/USD might then accelerate the fall towards testing the next relevant support near the $20.60 zone. The downward trajectory could get extended further towards the $20.00 psychological mark and drag the white metal to the $19.75-$19.70 region.
On the flip side, any further move up might continue to confront stiff resistance near the $22.00 mark, or the 100-day SMA. That said, some follow-through buying beyond the 38.2% Fibo. level of the recent rally from October 2022, around the $22.15 zone, could negate the bearish bias. The subsequent short-covering rally might then lift the XAG/USD towards the $22.55-$22.60 supply zone, en route to the 23.6% Fibo. level, around the $23.00 round figure.
FXStreet
