• Silver pulls back after hitting a near seven-month high earlier this Friday.
• The technical setup favours bulls and supports prospects for further gains.
• A slightly overbought RSI is seen as the only factor acting as a headwind.

Silver (XAG/USD) retreats from the vicinity of mid-$25.00s, or a near seven-month peak touched this Friday and refreshes daily low during the early part of the European session. The white metal, however, manages to hold above the $25.00 psychological mark and seems poised to prolong its well-established upward trajectory witnessed over the past three weeks or so.

The recent breakout through a technically significant 200-day Simple Moving Average (SMA), a multi-month-old descending trend line and the overnight close above the $25.00 mark validates the near-term positive outlook for the XAG/USD. That said, the Relative Strength Index (RSI) on the daily chart is flashing slightly overbought conditions and holding back bulls from placing fresh bets. Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for any further gains.

From current levels, weakness below the $25.00 round figure is likely to find some support near the $24.75-$24.70 region. Any further pullback could be seen as a buying opportunity near the $24.20-$24.15 region and is likely to remain limited near the descending trend-line resistance breakpoint, around the $24.00 mark. The latter should act as a pivotal point, which if broken might prompt some technical selling and pave the way for a deeper corrective decline, towards retesting the 200-day SMA, near the $23.40-$23.35 area.

On the flip side, the multi-month peak, around the $25.45-$25.50 region, might now act as an immediate hurdle, above which the XAG/USD could accelerate the momentum towards reclaiming the $26.00 mark. Some follow-through buying beyond the YTD peak, around the $26.15 area touched in May, will be seen as a fresh trigger for bullish traders. The subsequent move-up has the potential to lift the white metal to the $27.00 neighbourhood, or the March 2022 yearly swing high.

Silver daily chart

Technical levels to watch