Silver Price Analysis: XAG/USD bulls have the upper hand, 100 DMA support holds the key

• Silver struggles to capitalize on its modest intraday gains to the $21.00 neighbourhood.
• The technical set-up favours bulls and supports prospects for some meaningful upside.
• Dips towards the 100 DMA could be seen as a buying opportunity and remain limited.

Silver builds on the previous day's goodish bounce from sub-$20.00 levels and edges higher during the first half of trading on Thursday. The uptick, however, falters ahead of the $21.00 round figure during the early European session, forcing spot prices to surrender modest intraday gains.

From a technical perspective, this week's sustained breakout through a nearly four-month-old descending trend-line resistance and the 100-day SMA favours bullish traders. The positive outlook is reinforced by bullish technical indicators on the daily chart, which are still far from being in the overbought territory.

That said, it will still be prudent to wait for a move back above the $21.00 mark before positioning for any further appreciating move. The XAG/USD might then aim to test the very important 200-day SMA, around the $21.90 area. Some follow-through buying beyond the $22.00 level should pave the way for further gains.

The XAG/USD could then accelerate the momentum and climb towards the next relevant resistance near the $22.40 region. The subsequent move up has the potential to lift spot prices towards the $23.00 round-figure mark.

On the flip side, the $20.00 psychological mark, or the 100-day SMA, now seems to have emerged as immediate strong support. This is followed by the descending trend-line resistance breakout point, around the $19.55 region. The latter coincides with the 50-day SMA and should now act as a strong base for the XAG/USD.

Silver daily chart

Key levels to watch