Silver Price Analysis: XAG/USD retreats from multi-month top, downside seems limited

• Silver surrenders its intraday gains to the highest level since late April touched earlier this Monday.
• The technical setup still favours bullish traders and supports prospects for further appreciating move.
• A convincing breakdown below the 200-day SMA is needed to negate the near-term positive outlook.

Silver retreats from the mid-$23.00s or the highest level since late April touched earlier this Monday and drops to the lower end of its daily range during the early European session. The XAG/USD is currently trading just above the $23.00 round-figure mark, up around 0.10% for the day.

Slightly overbought RSI (14) on the daily chart turns out to be the only factor prompting some profit-taking around the XAG/USD. The near-term bias, however, remains tilted in favour of bullish traders in the wake of last week's sustained breakout through a technically significant 200-day SMA and the $22.00 mark. Hence, any subsequent pullback might still be seen as a buying opportunity and is more likely to remain limited, at least for the time being.

From current levels, any further slide below the $23.00 mark is likely to find decent support near the $22.60-$22.55 horizontal resistance breakpoint. The next relevant support is pegged near the $22.00 mark, below which the XAG/USD could slide further to the $21.40 area. The latter marks the 200 DMA and should act as a strong base. A convincing break below will negate the near-term positive outlook and pave the way for a deeper corrective pullback.

On the flip side, the multi-month peak, around the $23.50-$23.55 region, could act as an immediate resistance. Some follow-through buying should allow the XAG/USD to aim back to reclaim the $24.00 mark for the first time since April. The positive momentum could get extended towards the $24.25-$24.30 zone en route to the $24.55-$24.60 region.

Silver daily chart

Key levels to watch