Silver Price Analysis: XAG/USD eases from three-week top, bullish potential seems intact

• Silver climbs to a three-week high during the early European session on Tuesday.
• The technical setup favours bullish traders and supports prospects for further gains.
• A convincing break below the $22.70-65 area is needed to negate the positive bias.

Silver regains positive traction following the previous day's good two-way price swings and jumps to a three-week high during the early part of the European session on Tuesday. The white metal, however, struggles to find acceptance or build on the move beyond the $23.35-$23.40 confluence - comprising the 200-period Simple Moving Average (SMA) on the 4-hour chart and the 50% Fibonacci retracement level of the downfall from the June swing high.

Looking at the broader picture, the formation of an ascending channel from the vicinity of the $22.00 mark, or the multi-month low touched in June, points to a well-established short-term bullish trend. Moreover, technical indicators on hourly charts are holding comfortably in bullish territory and have just started gaining positive traction on the daily chart. This adds credence to the constructive setup and supports prospects for a further near-term appreciating move.

Bulls, however, might still wait for a sustained strength above the $23.35-$23.40 confluence before positioning for a move towards testing the 61.8% Fibo., around the $23.60 region, en route to the $24.00 round figure. The positive momentum could get extended further towards the $24.20-$24.25 intermediate barrier en route to the June monthly swing high, around the $24.55 region. The XAG/USD might eventually aim towards reclaiming the $25.00 psychological mark.

On the flip side, the 38.2% Fibo., around the $23.00 round figure, now seems to act as immediate support. Any further slide is likely to attract some buying and remain limited near the $22.65-$22.70 area, or the 23.6% Fibo. level. A convincing break below the latter could make the XAG/USD vulnerable to sliding back towards the $22.mark. Some follow-through selling should pave the way for fall towards the $21.70-$21.65 zone en route to the $21.25 support and the $21.00 mark.

Silver 4-hour charty

Key levels to watch