• Silver struggled to preserve/capitalize on its modest recovery gains from a one-month low.
• The technical set-up favours bearish traders and supports prospects for additional losses.
• Sustained move beyond the $22.00 mark is needed to negate the near-term negative bias.

Silver surrendered a major part of its intraday gains and retreated to the lower boundary of the daily trading range during the first half of the European session. The white metal was last seen trading just above the $21.00 mark, well within the striking distance of a nearly one-month low touched the previous day.

Given the overnight break through the 61.8% Fibonacci retracement level of the $20.46-$22.52 bounce, acceptance below the $21.00 handle would be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart are holding deep in the negative territory and are still far from being in the oversold zone.

The technical set-up supports prospects for an extension of the recent decline from the $22.50 region, or a one-month high touched on June 6. Hence, a subsequent fall back towards challenging the YTD low, around the $20.45 area touched on May 13, now looks like a distinct possibility amid the emergence of some US dollar dip-buying.

On the flip side, the daily swing high, around the $21.35-$21.40 region, now seems to act as immediate resistance ahead of the 50% Fibo. level. Any further move up might still be seen as a selling opportunity and remain capped near the $22.00 confluence hurdle, comprising 200-period SMA on the 4-hour chart and the 23.6% Fibo. level.

That said, some follow-through buying would negate the near-term negative outlook and shift the bias in favour of bullish traders. The XAG/USD might then surpass an intermediate resistance near the $22.30 area and test the $22.50-$22.60 supply zone.

Silver 4-hour chart

Key levels to watch