Silver Price Analysis: XAG/USD struggles near multi-month low, below 200-day SMA

• Silver bounces off a multi-month low touched on Friday, albeit lacks any follow-through buying.
• The overnight breakdown below a technically significant 200-day SMA favours bearish traders.
• A sustained strength beyond $23.00 is needed to support prospects for any meaningful recovery.

Silver stages a modest bounce from the vicinity of the $22.00 round-figure mark, or over a three-month low touched this Friday and for now, seems to have snapped a four-day losing streak. Spot prices, however, lack follow-through buying and trade below the mid-$22.00s, around the 61.8% Fibonacci retracement level of the March-May rally heading into the European session.

From a technical perspective, the overnight break and acceptance below the very important 200-day Simple Moving Average (SMA) was seen as a fresh trigger for bearish traders, against the backdrop of the recent failure near the 50-day SMA. Moreover, oscillators on the daily chart are holding deep in the negative territory and are still far from being in the oversold zone. This, in turn, adds credence to the bearish outlook for the XAG/USD and supports prospects for a further depreciating move.

Some follow-through selling below the $22.10 area, or the monthly low, will reaffirm the negative bias and drag the XAG/USD towards the $21.70-$21.65 support zone. The downward trajectory could get extended further towards the $21.25 intermediate support en route to the $21.00 round figure. The next relevant support is pegged near the $20.50 area, below which bears might eventually aim towards challenging the YTD low, levels just below the $20.00 psychological mark touched in March.

On the flip side, any meaningful recovery beyond the $23.45 area (200-day SMA) is more likely to attract fresh sellers near the $23.70 zone and remain capped near the $23.00 round-figure mark. The said handle coincides with the 50% Fibo. level, which if cleared decisively might trigger a short-covering rally and lift the XAG/USD to the $23.30-$23.35 hurdle en route to 38.2% Fibo. level, around the $23.70-$23.75 zone. The latter should now act as a pivotal point for short-term traders.

Silver daily chart

Key levels to watch