- Silver gains traction for the second day in a row and climbs to a more than five-month peak.
- The technical setup favors bullish traders and supports the prospect of further gains.
- A convincing break below the $21.00 mark is needed to negate the positive outlook.
Silver builds on a breakout of the very important 200-day SMA the previous day , and rose for the second day in a row on Friday. In early European trade, the white metal jumped to a more than five-month high, but struggled to find acceptance above the $22.00 round-figure mark. However, XAGUSD held on to its intraday gains and is currently trading around the $21.85-21.90 area, still up nearly 0.90% on the day.
An overnight rebound from sub-$21.00 levels followed by strength above a technically important moving average supports further near-term appreciation Prospects. That said, the RSI (14) on the daily chart is on the verge of entering overbought territory and caution is warranted for aggressive bullish traders. This makes it prudent to wait for a near-term consolidation or modest pullback before positioning for additional gains.
Nonetheless, XAGUSD seems poised to break the $22.00 mark and may aim to test the next relevant barrier near the $22.45-$22.50 area . The aforementioned area marks an area of high supply that could be a difficult problem for the bulls to overcome. However, some follow-through buying would mark a fresh breakout and pave the way for a recovery towards the $23.00 round. This momentum could eventually push spot prices to May highs around the $23.25-$23.30 area.
On the other hand, the daily low, near the $21.45 area, which coincides with the 200 DMA breakout, should protect the immediate Downside. Any further pullback can be seen as a buying opportunity and remains limited near $21.00. A convincing break below could spark some technical selling and drag XAGUSD towards the $20.40 support area. Failure to defend the aforementioned support level could change the near-term bias in favor of bearish traders.
Silver Daily Chart
Key level to watch
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