• Silver attracts fresh buyers on Thursday, albeit remains confined in a three-day-old trading range.
• The recent breakdown below the $22.30-20 strong horizontal support still favours bearish traders.
• Any subsequent move up might still be seen as a selling opportunity and is likely to remain capped.

Silver regains positive traction during the Asian session on Thursday and builds on the overnight bounce from the $20.70-$20.65 area, or its lowest level since March 13. The white metal currently trades around the $21.20 region, up nearly 1% for the day, though remains confined in a range held over the past three days.

From a technical perspective, the oversold Relative Strength Index (RSI) on the daily chart is seen as a key factor prompting some short-covering around the XAG/USD. That said, last week's breakdown through the $23.30-$23.20 horizontal support supports prospects for an extension of the recent downtrend. Moreover, the range-bound price action might still be categorized as a bearish consolidation phase, against the backdrop of the recent sharp decline from the very important 200-day Simple Moving Average (SMA). 

Hence, any subsequent move up might still be seen as a selling opportunity near the $21.40 region. A sustained strength beyond, however, might trigger a short-covering rally and allow the XAG/USD to aim back towards reclaiming the $22.00 round-figure mark. Any subsequent move up is more likely to remain capped near the $22.20-$22.30 strong horizontal support breakpoint, now turned resistance. The latter should act as a pivotal point, which if cleared might shift the near-term bias in favour of bullish traders.

On the flip side, the $21.00 round figure now seems to protect the immediate downside, below which the XAG/USD could slide back to the $20.70-$20.65 zone, or a nearly seven-month low touched on Tuesday. The downward trajectory could get extended further towards challenging the YTD trough – levels just below the $20.00 psychological mark set in March.

Silver daily chart

Technical levels to watch