- Silver recovers modestly from a nearly one-month low on Tuesday.
- Technical setup favors bearish traders, signaling prospects for further losses.
- Sustained momentum beyond $24.00 required to reverse bearish outlook.
Silver’s performance on Tuesday attracts modest buying, showing a partial recovery from Monday’s significant dip to the $23.00 round-figure mark. This price level represents nearly a one-month low for the white metal. Despite the recovery, silver fails to sustain upward momentum, fluctuating between minimal gains and losses during the early European session.
Bearish Indicators
The technical landscape appears to paint a bearish picture for the XAG/USD, as the path of least resistance seems to point downward. A decisive breakdown below the critical $23.30 confluence, which combines the 61.8% Fibonacci retracement level of June-July’s rally and an ascending trend-line from June’s multi-month low, has been interpreted as a bearish trigger.
The slide beneath the significant 200-day Simple Moving Average (SMA) may indicate a readiness for an extended decline from July’s over two-month peak.
Oscillators Signal Warning
Reinforcing the negative forecast, oscillators on the daily chart have begun to drift into bearish territory. However, caution is advised, and it may be prudent to await further selling confirmation below the $23.00 mark before placing additional bearish positions.
The XAG/USD might then be poised to accelerate its descent toward the $22.15-$22.10 zone, followed by a decisive breach of the $22.00 mark, potentially leading to more profound losses.
Potential Upside Resistance
On the contrary, the previous confluence support breakpoint, around $23.30, could now act as an immediate barrier. A sustained move above this level might prompt a short-covering rally towards $23.70 or the 50% Fibonacci level. This recovery effort, however, is expected to face fresh selling pressure and likely remain confined near another convergence of the 100-day SMA and the 38.2% Fibonacci level, within the $24.00-$24.10 range.
This latter region may serve as a pivotal turning point; a decisive clearing might lift the XAG/USD back towards the 23.6% Fibonacci level in the $24.45-$24.50 supply zone, possibly leading to the $24.75 hurdle and the $25.00 psychological landmark.
Outlook
The current technical analysis for Silver highlights an immediate vulnerability, with strong indications favoring bearish traders. A definitive move beyond the $24.00 region would be required to negate this bearish bias, but the prevailing trend suggests caution for bullish investors.
This rewrite maintains the original content’s integrity and presents it in a structured and analytical manner, consistent with Bloomberg’s style.
TRADE IDEA DETAILS
CURRENCY PAIR: XAG/USD (Silver/US Dollar)
CURRENT TREND: Bearish
TRADE SIGNAL: Sell
👉ENTRY PRICE: $23.30 (Just above the critical support breakdown)
âś…TAKE PROFIT: $22.15-$22.10 (Next support area)
❌STOP LOSS: $23.70 (Above the 50% Fibonacci level)
RISK MANAGEMENT:
- Position Size: Consider using a position size that doesn’t risk more than 1-2% of the trading capital.
- Risk-Reward Ratio: The potential take profit and stop loss levels create a risk-reward ratio of approximately 2:1, favoring a more risk-averse strategy.
ANALYSIS:
- Bearish Indicators: The recent breakdown below the $23.30 confluence and the 200-day SMA has given a strong bearish signal. Oscillators drifting into bearish territory provide additional confirmation.
- Potential Downside: The next significant support lies in the $22.15-$22.10 area. Breaking the $23.00 mark would likely lead to accelerated losses, targeting these levels.
- Resistance: Immediate resistance is expected around the $23.30 area, with further barriers around the $24.00-$24.10 region.
TRADE PLAN:
- Entry: Look to enter a short position near the $23.30 level, where previous support may now act as resistance.
- Monitoring: Keep a close eye on price action around the $23.00 mark and be prepared for potential acceleration if this level is broken.
- Timeframe: This trade idea is based on the daily chart and may be suitable for a medium-term horizon, perhaps a week or two.
FINAL THOUGHTS:
The XAG/USD pair exhibits a bearish bias, and the technical indicators favor a continuation of the downtrend. The outlined entry, take profit, and stop loss levels provide a structured approach to capitalize on this trend, considering both potential profit and risk.