Silver Price Analysis: XAG/USD drops to over two-year low, oversold RSI warrants caution for bears

• Silver continues drifting lower for the fifth straight day and hits over a two-year low on Thursday.
• A convincing break and acceptance below the $18.00 mark support prospects for further losses.
• A slightly oversold RSI (14) on the daily charts warrants caution for aggressive bearish traders.

Silver is prolonging a nearly three-week-old bearish trend and losing ground for the fifth successive day on Thursday. The downward trajectory extends through the first half of the European session and drags the white metal to the $17.65 area, or its lowest level since June 2020.

Given the overnight break through the previous YTD low, subsequent weakness and acceptance below the $18.00 round figure favour bearish traders. That said, RSI (14) on the daily chart is already flashing oversold conditions and makes it prudent to wait for some near-term consolidation before the next leg down.

Nevertheless, the XAG/USD seems poised to extend the bearish trajectory and aim toward testing the $17.00 round-figure mark. Some follow-through selling has the potential to drag spot prices further towards the next relevant support near the $16.60-$16.50 horizontal zone.

On the flip side, any attempted recovery might confront resistance and attract fresh sellers near the $18.00 mark. This, in turn, should cap the XAG/USD near the $18.15-$18.25 support breakpoint, now turned stiff barrier. The latter should now act as a pivotal point, which if cleared might trigger a short-covering bounce.

The XAG/USD might then accelerate the move towards the $18.70-$18.75 intermediate resistance, above which bulls might aim to reclaim the $19.00 mark. Some follow-through buying will suggest that spot prices have formed a near-term bottom and set the stage for some meaningful recovery in the near term.

Silver daily chart

Technical levels to watch