Silver Price Analysis: XAG/USD remains confined in a range, not out of the woods yet

• Silver was seen consolidating its recent slide to a two-year low and remained confined in a range.
• The set-up favours bearish traders, though oversold RSI on the daily chat warrants some caution.
• Sustained weakness below the $19.00-$18.90 region is needed to confirm a fresh bearish break.

Silver continued with its struggle to register any meaningful recovery from a two-year low and has been oscillating in a narrow band over the past four sessions. The range-bound price action constitutes the formation of a rectangle on short-term charts and points to indecision among traders over the near-term direction.

Given last week's convincing break below descending trend-channel support, the indecisive move might still be categorized as a bearish consolidation phase before the next leg down. That said, the oversold RSI (14) on the daily chart held back bearish traders from placing fresh bets and positioning for any further losses.

Hence, some follow-through selling below the $19.00-$18.90 region, or the YTD low touched last week, is needed to confirm a fresh bearish breakdown. The XAG/USD would then turn vulnerable to accelerate the downward trajectory towards testing the $18.00 round figure en-route the next relevant support near the $17.65 zone.

On the flip side, the top boundary of a near one-week-old trading range, around the $19.50-$19.55 area, might continue to act as an immediate hurdle. Any subsequent move up is more likely to meet with a fresh supply and run out of steam near the descending channel support breakpoint, now turned resistance near the $19.75-$19.80 zone.

This is closely followed by the $20.00 psychological mark, which if cleared decisively might trigger a short-covering move. The XAG/USD might then surpass an intermediate barrier near the $20.60-$20.65 region, which coincides with 100-period SMA on the 4-hour chart, and aim to reclaim the $21.00 round-figure mark.

The latter marks the top boundary of the aforementioned descending channel and also nears the 200-period SMA on the 4-hour chart. Sustained strength beyond would suggest that the XAG/USD has formed a strong base near the $19.00 mark and pave the way for a further near-term appreciating move.

Silver 4-hour chart

Key levels to watch