- Silver witnessed some follow-through selling for the third successive day.
- Slightly oversold RSI on the 1-hour chart helped limit any further losses.
- The technical set-up still remains tilted firmly in favour of bearish traders.
Silver extended its recent pullback from the vicinity of the 50% Fibonacci level of a sharp fall from monthly swing highs and edged lower for the third successive day.
The downward momentum dragged the commodity to one-week lows, around the $23.15 region during the early part of the trading action on Thursday. However, oversold RSI (14) on the 1-hour chart assisted the XAG/USD to find some support near the 23.6% Fibo. level and trim a part of its intraday losses.
Looking at the broader technical picture, sustained weakness below the $23.50-45 confluence region – comprising of 38.2% Fibo. level and 100-hour SMA – was seen as a key trigger for bearish traders. This might have also set the stage for an extension of the ongoing downward trajectory.
The bearish outlook is reinforced by the fact that technical indicators on 4-hour/daily charts are holding deep in the bearish territory and are still shy of being in the oversold zone. Hence, any meaningful recovery attempt might still be seen as an opportunity for bearish traders.
From current levels, the daily swing lows, around the 23.15 region might protect the immediate downside. Some follow-through selling below the $23.00 mark will set the stage for a slide back towards challenging YTD lows, around the $22.20 region touched last Monday.
On the flip side, the $23.45-50 confluence support breakpoint now seems to act as an immediate strong hurdle. A sustained move beyond might trigger a short-covering move and push the XAG/USD back towards the $23.90-$24.00 region (38.2% Fibo.), which should now cap the upside.