Silver Price Analysis: XAG/USD clings to modest intraday gains, not out of the woods yet

• Silver gained some positive traction on Tuesday, though lacked follow-through buying.
• 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 negative outlook.

Silver attracted some dip-buying near the $21.10 area on Tuesday, albeit lacked bullish conviction and remained below a three-day high touched the previous day.

Given the recent repeated failures to find acceptance above the 200-period SMA on the 4-hour chart, the near-term bias remains tilted in favour of bearish traders. The negative outlook is reinforced by the fact that technical indicators on short-term charts are holding deep in the bearish territory and are still far from being in the oversold zone.

Some follow-through selling below the $21.00 round-figure mark will reaffirm the bearish bias and drag the XAG/USD back towards the monthly swing low, around the $20.60 area touched last week. The downward trajectory could further get extended towards the YTD low, around the $20.45 region en-route the next relevant support near the $20.00 psychological mark.

On the flip side, the overnight swing high, around the $21.55 region now seems to act as an immediate resistance ahead of the 200-period SMA on the 4-hour chart, currently near the $21.65 area. Sustained strength beyond could trigger a short-covering move, though the momentum runs the risk of fizzling out rather quickly and remain capped near the $22.00 mark.

The latter should act as a pivotal point, which if cleared decisively might negate the bearish outlook and pave the way for a further near-term appreciating move. The XAG/USD might then accelerate the move towards an intermediate resistance near the $22.30 area en-route the $22.50-$22.60 hurdle, above which bulls might aim to reclaim the $23.00 round-figure mark.

Silver 4-hour chart

Key levels to watch