Silver Price Analysis: XAG/USD drops closer to last week’s swing low, around mid-$22.00s

• Silver continues losing ground for the second straight day and drops to a fresh weekly low.
• The technical setup favours bearish traders and supports prospects for a further downfall.
• A sustained move beyond the $23.60-70 multiple tops barrier will negate the bearish bias.

Silver (XAG/USD) remains under heavy selling pressure for the second successive day on Wednesday and hits a fresh weekly low during the early part of the European session. The white metal currently trades around the $22.60-$22.55 area, down 1.30% for the day, and seems vulnerable to extending its descending trend.

From a technical perspective, the recent repeated failures to find acceptance above the 200-day Simple Moving Average (SMA) and rejections near the $23.60-$23.70 supply zone constitute the formation of a bearish multiple tops pattern. This, along with the fact that oscillators on the daily chart have again started gaining negative traction, suggests that the path of least resistance for the XAG/USD is to the downside.

Some follow-through selling below last week's swing low, around the $22.45 region, will reaffirm the bearish bias and pave the way for deeper losses. The XAG/USD might then fall to the $22.00 mark before dropping to the $21.70 horizontal support zone and the $21.35-$21.30 region. The downward trajectory could drag the white metal further towards the $21.00 mark en route to the $20.70-$20.65 area, or a seven-month low touched in October.

On the flip side, the $22.75-$22.80 congestion zone now seems to act as an immediate hurdle ahead of the $23.00 round figure. The next relevant hurdle is pegged near the $23.25 region, or the 200-day SMA, above which the XAG/USD could make a fresh attempt to clear the $23.60-$23.70 strong barrier. A convincing breakout through will be seen as a fresh trigger for bullish traders and set the stage for additional gains.

Silver daily chart

Technical levels to watch