Silver prices have exhibited volatility over recent trading sessions, with the XAG/USD pair dipping for the second consecutive day below the mid-$27.00 range during Asian market hours. Despite maintaining a broader trading range in the past week, the precious metal appears susceptible to further downward movement, reflecting a bearish sentiment in the market.
Technical analysis of the XAG/USD pair reveals a recent setback near the 23.6% Fibonacci retracement level from the decline observed in July and August. This, coupled with continuous selling pressure, validates a near-term negative outlook for silver. Additionally, oscillators on the daily chart indicate a strong bearish sentiment, remaining significantly distant from the oversold zone.
A potential breach below the $27.00 mark could lead to a retest of the multi-month low in the $26.50-$26.45 range, a critical level to monitor for bearish confirmation. Further downside targets include the May monthly swing low around $26.00 and intermediate support at $25.60, potentially extending towards the psychological level of $25.00.
On the contrary, a breakout above the 23.6% Fibonacci level at $27.75 might trigger a short-covering rally, propelling silver prices beyond $28.00 towards the 38.2% Fibonacci level between $28.50-$28.55. However, any upward momentum is likely to face resistance near the 100-day Simple Moving Average support breakpoint located around $28.75-$28.80.
Should the XAG/USD pair decisively surpass the 100-day SMA resistance, it could mark a significant shift in the current bearish outlook. This scenario would open doors for a potential rally towards $29.00, followed by resistance levels near $29.45 and the 61.8% Fibonacci level at $29.75, with a possible target of the psychological barrier at $30.00.
In summary, the technical analysis suggests that silver prices are currently swaying towards a bearish trajectory, with critical support and resistance levels delineated for traders to monitor for potential market movements. Investors are advised to remain vigilant of these key levels as they navigate the intricacies of the silver market.
