Silver Price Analysis: XAG/USD rebounds from multi-week low, not out of the woods yet

• Silver dropped to a six-week low on Friday, confirming a bearish break below the $21.00 mark.
• Any meaningful recovery attempt could be seen as a selling opportunity and remain capped.
• The XAG/USD now seems vulnerable to weaken further below the $20.00 psychological mark.

Silver reversed a knee-jerk slide to a six-week low and was last seen trading with only modest intraday losses, around the $20.90-$20.85 region during the early North American session. That said, any meaningful recovery still seems elusive and attempted recovery runs the risk of fizzling out rather quickly.

Sustained break and acceptance below the $21.00 round-figure mark could be seen as a fresh trigger for bearish traders. Moreover, technical indicators on daily/4-hourly charts are holding deep in the negative territory and are still far from being in the oversold zone. This, in turn, supports prospects for further losses.

Hence, a subsequent slide back towards challenging the YTD low, around the $20.45 region set in May, looks like a distinct possibility. Some follow-through selling should pave the way for an extension of the downward trajectory and pave the way for a fall to the $20.00 psychological mark en-route the $19.35-$19.30 support.

On the flip side, momentum beyond the $21.00 mark is likely to confront resistance near the daily high, around the $21.15 region. Any further recovery might still be seen as a selling opportunity near the  $21.50-$21.55 supply. This, in turn, should cap the XAG/USD near the $21.70 area, or the 200-period SMA on the 4-hour chart.

Silver 4-hour chart

Key levels to watch