Silver, as denoted by XAG/USD, continued its downward momentum for the second consecutive day, exacerbating the previous day’s decline from the 200-day SMA (Simple Moving Average) on Tuesday. The European early trading session on Tuesday saw the white metal’s decline, pushing it to a two-day low in the $22.75-$22.70 region within the past hour.
In a broader perspective, XAG/USD has maintained a range-bound fluctuation over the past three weeks, forming a rectangular pattern on the daily chart, indicative of trader uncertainty regarding future direction. However, recent attempts by silver prices to breach the technically significant 200-day SMA were thwarted, and the supply zone near $23.60-$23.70 favors bearish sentiment.
Furthermore, daily chart technical indicators have once again started exerting downward pressure, suggesting minimal resistance to its decline. Before firmly betting on further downward movement, it is prudent to wait for sustained selling pressure to break through the support region around $22.50. Following this, XAG/USD could potentially accelerate its descent to the $22 psychological level, subsequently dropping to the support level near $21.70.
The downward trend could potentially extend further, dragging XAG/USD to the next significant support levels near the $21.35-$21.30 region and the $21 psychological level. Bearish traders might subsequently challenge the seven-month low at $20.70-$20.65 (from October).
Conversely, the $23 psychological level seems to currently restrict short-term upside for silver prices, followed by the 200-day SMA, which is currently near the $23.25 region. Beyond that lies the $23.60-$23.70 region, which may serve as a critical pivot point for short-term traders. A sustained breakout beyond this level could erase the negative outlook and shift short-term bias in favor of bullish traders, potentially paving the way for an ascent toward the $24 psychological level.
