Silver Price Analysis: XAG/USD seems poised to appreciate further, could aim to test 200 DMA

• Silver extends the overnight breakout momentum and climbs to the $21.00 neighbourhood.
• The set-up favours bulls and supports prospects for an extension of the appreciating move.
• Any meaningful corrective slide would be seen as a buying opportunity and remains limited.

Silver builds on the previous day's strong move up and gains traction for the third successive day on Tuesday. This also marks the fifth day of a positive move in the previous six and lifts the white metal to the $21.00 mark, or its highest level since late June during the early European session.

The overnight sustained breakout through a nearly four-month-old descending trend-line resistance and the $20.00 psychological mark, or the 100-day SMA was seen as a fresh trigger for bullish traders. Given that technical indicators on the daily chart are still far from being in the overbought zone, the set-up supports prospects for an extension of the appreciating move for the XAG/USD.

Some follow-through buying beyond the $21.00 round figure will reaffirm the positive outlook and allow bulls to challenge the very important 200-day SMA. The latter is currently pegged just ahead of the $22.00 mark, above which the XAG/USD could climb towards the next relevant resistance near the $22.40 region. The momentum could further get extended towards the $23.00 round-figure mark.

On the flip side, the $20.80-$20.75 zone now seems to protect the immediate downside. Any subsequent pullback is more likely to attract fresh buying and remain limited near the $20.00 mark, or the 100-day SMA. This is followed by the descending trend-line resistance breakout point, around the $19.55 region, which should now act as a strong base for the XAG/USD and a key pivotal point.

Silver daily chart

Key levels to watch