• Silver remains on the defensive for the third straight day, albeit lacks follow-through selling.
• The technical setup still favours bulls and supports the prospects for further near-term gains.
• A convincing break below the $24.50-40 area is needed to negate the constructive outlook.

Silver recovers a part of its modest intraday losses, albeit struggles to capitalize on the move and trades with a mild negative bias for the third successive day on Tuesday, around mid-$25.00s.

From a technical perspective, the lack of any follow-through selling warrants some caution before confirming that the XAG/USD has formed a near-term top and positioning for any meaningful pullback from over a one-year high touched last Friday. Moreover, the recent repeated rebounds from the $24.50-$24.40 strong horizontal resistance breakpoint, now turned support, favours bullish traders.

This, along with positive oscillators on the daily chart, suggest that the path of least resistance for the white metal is to the upside. That said, the XAG/USD has been struggling to find acceptance above the $26.00 mark, warranting caution for bulls. The XAG/USD, nevertheless, seems poised to surpass the $26.25-$26.30 hurdle and climb to the $27.00 neighbourhood, or the March 2022 high.

On the flip side, Friday's swing low, around the $25.15 region, might now act as a support and protect the immediate downside. This is closely followed by the $25.00 psychological mark, below which the XAG/USD could extend the corrective slide towards testing the $24.50-$24.40 resistance-turned-support. A convincing break below the latter is needed to negate the near-term positive outlook.

The XAG/USD might then turn vulnerable to weaken further below the $24.00 mark and drop to the next relevant support near the $23.50-$23.30 confluence. The latter comprises the 50-day and the 100-day SMAs and is followed by support near the $23.00 round-figure mark.

Silver daily chart

Key levels to watch