Silver, a key player in the precious metals arena, is undergoing a dynamic phase in its price trajectory. The metal has recently managed to muster some buying interest on Tuesday, recuperating a portion of its previous day's substantial losses that led it to hover around the $23.00 mark - a level not seen in nearly a month. However, the rally's potential appears constrained, as the white metal grapples with intermittent gains and minor losses during the early European session. Furthermore, the prevailing technical setup casts shadows of bearish inclinations for XAG/USD.
The market witnessed an overnight breach below the $23.30 confluence, encompassing both the 61.8% Fibonacci retracement level stemming from the June-July rally and an ascending trend-line tracing its origins back to a multi-month low reached in June. This breach, viewed as a fresh signal for bearish traders, was complemented by a subsequent slide below a pivotal 200-day Simple Moving Average (SMA). These events have potentially paved the way for an extension of the recent downtrend, initiated from a peak that stood for over two months in July.
The bearish perspective is reinforced by the observation that daily chart oscillators have begun their shift into bearish territory. However, a prudent strategy would involve awaiting further signs of follow-through selling, coupled with a sustained decline below the $23.00 level, before contemplating new bearish positions. In such a scenario, the XAG/USD could experience an acceleration towards the $22.15-$22.10 vicinity, subsequently eyeing the $22.00 threshold as a potential breaking point that could unlock further losses.
Conversely, the previously breached confluence support at approximately $23.30 now assumes the role of an immediate resistance barrier. Should this barrier be overcome with sustained strength, it could trigger a rally prompted by short-covering, potentially propelling the price towards the $23.70 range or the 50% Fibonacci retracement level. However, any recovery attempts may encounter fresh selling pressure, limiting gains around another confluence bracketing the 100-day SMA and the 38.2% Fibonacci level, situated in the $24.00-$24.10 region.
This juncture holds pivotal significance. If decisively cleared, it could usher the XAG/USD into a trajectory aimed at the 23.6% Fibonacci level, residing in the supply zone of $24.45-$24.50. From there, the path opens towards overcoming the $24.75 obstacle and attaining the psychologically significant $25.00 mark. As the market intricately navigates these technical waters, keen observation remains paramount.
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