Silver Price Analysis: XAG/USD clings to strong intraday gains, eyes $21.60-70 supply zone

• Silver regains strong positive traction on Tuesday and reverses the previous day’s downfall.
• The technical set-up favours bullish traders and supports prospects for further intraday gains.
• Acceptance below the $21.00-$20.90 area is needed to negate the near-term positive outlook.

Silver shows some resilience below the $21.00 mark and regains positive traction on Tuesday, reversing a major part of the overnight slide to a four-day low. The white metal sticks to its intraday gains through the first half of the European session and is currently placed around the $21.35 region, up nearly 2% for the day.

From a technical perspective, the emergence of aggressive buying near the $20.90 static support favours bullish traders and supports prospects for additional gains. The constructive outlook is reinforced by the fact that oscillators on hourly charts have again started gaining positive traction. This, in turn, supports prospects for a further intraday appreciating move for the XAG/USD.

That said, any subsequent move up might continue to confront stiff resistance near the $21.60-$21.70 supply zone. Some follow-through buying will reaffirm the bullish bias and allow the XAG/USD to reclaim the $22.00 mark. This is followed by a five-month high, around the $22.25 zone, above which spot prices could climb to the $22.50-$22.60 area en route to the $23.00 round figure.

On the flip side, the $21.00-$20.90 area should continue to act as immediate strong support. A convincing break below the latter could negate the positive outlook and possibly shift the near-term bias in favour of bearish traders. The XAG/USD might then accelerate the downfall to the $20.60-$20.55 area before eventually dropping to challenge the $20.00 psychological mark.

Silver 4-hour chart

Key levels to watch