• Silver regained positive traction on Monday and climbed back closer to last week’s swing high.
• Mixed technical indicators on hourly/daily charts warrant caution for aggressive bullish traders.
• Sustained break below the $21.25-$21.20 region will negate prospects for any meaningful gains.

Silver attracted fresh buying on Monday and inched back closer to last week's swing high, albeit struggled to capitalize on the move beyond the $22.00 round-figure mark.

From a technical perspective, the emergence of dip-buying and acceptance above the 23.6% Fibonacci retracement level of the $28.22-$20.46 downfall favours bullish traders. Moreover, oscillators on hourly charts have been gaining positive traction and add credence to the constructive outlook.

That said, technical indicators on the daily chart - though have been recovering from the negative territory - are yet to confirm a bullish bias. This makes it prudent to wait for a subsequent strength beyond the 100-period SMA on the 4-hour chart before positioning for any further gains.

The XAG/USD might then surpass an intermediate hurdle near the $22.30 area and accelerate the momentum towards testing the next relevant hurdle near the $22.65 zone. The latter coincides with the 38.2% Fibo. level, which if cleared would suggest that spot prices have bottomed out.

On the flip side, weakness below the 23.6% Fibo. level resistance breakpoint now seems to find support near Friday's swing low, around the $21.60 area. Any further pullback is more likely to find decent support near the $21.25-$21.20 area, which should act as a strong base for the XAG/USD.

A convincing break below would negate prospects for any further positive move and prompt aggressive technical selling. The XAG/USD would then turn vulnerable to weakening further below the $21.00 mark and aim to challenge the YTD low, around the $20.45 area touched earlier this month.

Silver 4-hour chart

Key levels to watch