Silver Price Analysis: XAG/USD bulls now await a move beyond descending trend line hurdle

• Silver attracts some dip-buying on Tuesday and inches back closer to a multi-week high.
• The set-up favours bullish traders and supports prospects for additional near-term gains.
• Only a sustained break below the $18.45-40 area will negate the near-term positive bias.

Silver reverses its early lost ground and moves back to the $19.80 area during the first half of the European session on Tuesday. The white metal is currently placed just below a nearly four-week high touched the previous day and seems poised to prolong its recent recovery from the $17.55 area, or over a two-year low.

The positive outlook is reinforced by the fact that technical indicators on the daily chart have just started moving in the bullish territory and are still far from being in the overbought zone. That said, the overnight rejection by a descending trend line extending from the April swing high warrants some caution for aggressive bullish traders.

Hence, it will be prudent to wait for a convincing daily close above the trend line, currently at around the $19.75 mark before positioning for any further appreciating move. The XAG/USD might then climb to test the 100-day SMA, near the $20.45 region, before accelerating the move towards reclaiming the $21.00 round-figure mark.

Some follow-through buying has the potential to lift the XAG/USD towards the next relevant hurdle, around the $21.50 area. The upward trajectory could further get extended towards the $22.00 mark. This is closely followed by the very important 200-day SMA, around the $22.15 region, which should act as a strong barrier for the commodity.

On the flip side, any further slide below the daily low, around the $19.55-$19.50 area, now seem to find decent support near the $19.25 region, or the 50-day SMA. Any subsequent slide could be seen as a buying opportunity and remain limited near the $18.45-$18.40 support zone. A convincing break below the latter is needed to negate the positive bias.

Silver daily chart

Key levels to watch