Silver Price Analysis: XAG/USD reclaims $22.00, intraday set-up favours bullish traders

• Silver gained positive traction for the second straight day and climbed to a near two-week high.
• Acceptance above the 23.6% Fibo. level supports prospects for an extension of the bullish move.
• Mixed technical indicators on hourly/daily charts warrant caution before placing aggressive bets.

Silver built on the overnight strong intraday rally of over 3% and gained some follow-through traction for the second successive day on Friday. The momentum pushed the white metal to a nearly two-week high, beyond the $22.00 round-figure mark during the first half of the European session.

From a technical perspective, sustained move and acceptance above the 23.6% Fibonacci retracement level of the $28.22-$20.46 fall could be seen as a fresh trigger for bullish traders. Oscillators on hourly charts have been gaining traction and add credence to the constructive outlook.

That said, technical indicators on the daily chart - though have been recovering from the negative territory - are yet to confirm a bullish bias. This makes it prudent to wait for a subsequent strength beyond the 100-period SMA on the 4-hour chart before positioning for any further gains.

The XAG/USD might then surpass an intermediate hurdle near the $22.30 area and accelerate the momentum towards testing the next relevant hurdle near the $22.65 zone. The latter coincides with the 38.2% Fibo. level, which if cleared would suggest that spot prices have bottomed out.

On the flip side, the 23.6% Fibo. level resistance breakpoint, around the $21.80 region, now seems to protect the immediate downside. Any further pullback is more likely to find decent support near the $21.25-$21.20 area, which should act as a strong near-term base for the XAG/USD.

A convincing break below would negate prospects for any further positive move and prompt aggressive technical selling. The XAG/USD would then turn vulnerable to weaken further below the $21.00 round-figure mark and aim to challenge the YTD low, around the $20.45 area touched last week.

Silver 4-hour chart

Key levels to watch