- Silver met with aggressive supply near the $22.00 confluence resistance on Monday.
- The technical set-up favours bearish traders and supports prospects for further losses.
- Sustained strength beyond the $22.00 mark is needed to negate the bearish outlook.
Silver extended its rejection slide from the $22.00 confluence hurdle and dropped to a near one-month low, around the $21.20 region during the early North American session on Monday.
The latter coincides with the 61.8% Fibonacci retracement level of the $20.46-$22.52 bounce and acceptance below would be seen as a fresh trigger for bearish traders. Meanwhile, Technical indicators on daily/4-hourly charts are holding deep in the bearish territory and are still far from being in the oversold zone.
The technical set-up seems tilted firmly in favour of bearish traders and supports prospects for an extension of the ongoing depreciating move for the XAG/USD. Hence, a subsequent slide below the $21.00 mark, towards challenging the YTD low around the $20.45 area touched on May 13, now looks like a distinct possibility.
On the flip side, attempted recovery might now confront resistance near the 50% Fibo. level, around mid-$21.00s. Any further move up might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly near the $22.00 mark, comprising 200-period SMA on the 4-hour chart and the 23.6% Fibo. level.
A convincing break through the aforementioned barrier would negate the near-term negative bias and shift the bias in favour of bullish traders. The XAG/USD might then surpass an intermediate resistance near the $22.30 area and test the $22.50-$22.60 supply zone. Some follow-through buying should pave the way for additional gains.
Silver 4-hour chart
Key levels to watch