• Silver meets with a fresh supply and erodes a part of the overnight gains to a one-week high.
• The technical setup seems tilted in favour of bears and supports prospects for further losses.
• A sustained strength beyond the $22.20-30 region is needed to negate the negative outlook.

Silver comes under some renewed selling pressure on Tuesday and for now, seems to have snapped a two-day winning streak to a one-week high, around the $22.00 mark touched the previous day. The white metal maintains its offered tone through the early part of the European session and currently trades near the daily low, around the $21.70 region, down over 0.75% for the day.

From a technical perspective, the recent failure near the 200-day Simple Moving Average (SMA) and a subsequent breakdown through the $22.30-$22.20 horizontal support favours bearish traders. Moreover, oscillators on the daily chart are still holding in the negative territory and suggest that the path of least resistance for the XAG/USD remains to the downside.

Some follow-through weakness below the overnight swing low, around the $21.55 region, will reaffirm the negative bias and drag the white metal back towards a multi-day-old trading range resistance breakpoint, around the $21.3-$21.30 region. The next relevant support is pegged near the $21.00 mark, below which the XAG/USD could slide to the $20.70-$20.65 region.

The latter represents a nearly seven-month low touched last week, which if broken decisively should pave the way for the resumption of the recent descending trend witnessed over the past month or so. The XAG/USD might then turn vulnerable to prolong the downward trajectory and challenge the YTD trough – levels just below the $20.00 psychological mark.

On the flip side, momentum beyond the $22.00 mark is likely to remain capped near the aforementioned support breakpoint, now turned resistance, around the $22.20-$22.30 region. A sustained strength beyond, however, might prompt an aggressive short-covering move and allow the XAG/USD to reclaim the $23.00 mark. The momentum could get extended further towards the 200-day SMA, currently around the $23.35 area.

Silver daily chart

Technical levels to watch