Silver Price Analysis: XAG/USD corrects from three-week top, holds above $24.00 mark

• Silver meets with some supply and erodes a part of the overnight gains to a three-week peak.
• Extremely overbought RSI on hourly charts prompts traders to lighten some of their bullish bets.
• Any subsequent slide might still be seen as a buying opportunity and is likely to remain limited.

Silver comes under some selling pressure on Thursday and for now, seems to have snapped a five-day winning streak to a three-week high, around the $24.35 region touched the previous day. The white metal extends intraday descent through the early European session and drops to a fresh daily low, around the $24.15 region in the last hour.

From a technical perspective, the extremely overbought Relative Strength Index (RSI) on hourly charts turns out to be a key factor that prompts some long-unwinding around the XAG/USD. That said, oscillators on the daily chart have just started gaining positive traction. Furthermore, the overnight breakout through the $23.75 confluence, comprising the 200-period Simple Moving Average (SMA) on the 4-hour chart and the 50% Fibonacci retracement level of the July-August downfall, favours bulls.

Hence, any subsequent slide below the $24.00 round-figure mark is more likely to attract fresh buyers near the aforementioned confluence breakpoint, now turned support. This should help limit the downside for the XAG/USD near the $23.40 region. This is closely followed by support near the $23.25 area, which if broken could drag the white metal back towards the $23.00 mark. A convincing break below the latter will negate the positive outlook and shift the near-term bias in favour of bearish traders.

On the flip side, bulls might now wait for some follow-through buying beyond the overnight swing high, around the $24.35 area, before placing fresh bets. The XAG/USD might then aim to surpass the $24.55-$24.60 intermediate hurdle and climb further to the $25.00 psychological mark en route to the July monthly swing high, around the $25.25 zone. Some follow-through buying will mark a fresh breakout and pave the way for a further near-term appreciating move toward the $26.00 round figure.

Silver 4-hour chart

Technical levels to watch