Silver Price Analysis: XAG/USD holds steady above mid-$22.00s, not out of the woods yet

• Silver trades with a positive bias for the second straight day, though lacks follow-through.
• The technical setup favours bears and warrants caution before positioning for further gains.
• A sustained move beyond the $23.60-70 supply zone is needed to negate the negative bias.

Silver (XAG/USD) attracts some dip-buying on Friday and for now, seems to have stalled the overnight rejection slide from the $23.00 round-figure mark. The white metal trades with a mild positive bias for the second successive day and is currently placed around the $22.65-$22.70 region, up over 0.30% for the day.

The intraday uptick, meanwhile, lacks bullish conviction, warranting some caution before positioning for a further appreciating move. Moreover, the recent decline from the $23.60-$23.70 supply zone constituted the formation of multiple tops, warranting caution for bulls. Adding to this, the repeated failures to find acceptance above the very important 200-day Simple Moving Average (SMA) suggest that the path of least resistance for the XAG/USD is to the downside.

The bearish outlook is reinforced by the fact that technical indicators on the daily chart have just started drifting into negative territory. Hence, any subsequent move-up might continue to attract fresh sellers and run the risk of fizzling out rather quickly. From current levels, the overnight swing high, around the $23.00 mark, might confront an immediate hurdle ahead of the $23.25 area (200-day SMA) and the $23.60-$23.70 region. The latter should now act as a key pivotal point.

A sustained strength beyond the aforementioned barriers, however, will negate the bearish outlook and prompt an aggressive short-covering rally. The XAG/USD might then climb further beyond the $24.00 mark, towards the $24.20-$24.25 intermediate hurdle, before making a fresh attempt to conquer the $25.00 psychological mark.

On the flip side, the $22.35-$22.30 area, or a three-week low touched on Wednesday, is likely to protect the immediate downside. This is followed by the $22.00 mark and the next relevant support near the $21.70 zone. Some follow-through selling will be seen as a fresh trigger for bearish traders and drag the XAG/USD further towards the $21.35-$21.30 support en route to the $21.00 round figure and a multi-month low, around the $20.70-$20.65 area touched in October.

Silver daily chart

Technical levels to watch