• Silver witnessed a dramatic turnaround from over a three-week high touched earlier this Tuesday.
• Slightly oversold RSI on the 1-hour chart might hold back bearish traders from placing fresh bets.
• Sustained strength back above the $23.55 region is needed for the resumption of the bullish trend.

Silver extended its sharp intraday pullback from the $24.00 mark, or over a three-week high touched earlier this Tuesday and continued losing ground through the early North American session. The white metal has now reversed its gains recorded over the past two trading sessions and was last seen trading just above the $23.00 round figure.

The aforementioned handle coincides with the 200-hour SMA, which is closely followed by the 50% Fibonacci retracement level of the $22.00-$23.99 strong move up. Technical indicators on the 4-hour chart have just started drifting into the negative territory and also retreated sharply on the daily chart, favouring bearish traders.

That said, RSI (14) on the 1-hour chart is already flashing slightly oversold conditions and warrants some caution before placing aggressive bearish bets. Hence, it will be prudent to wait for some intraday consolidation or a convincing break below the $23.00 mark before positioning for an extension of the intraday depreciating move.

The next relevant support is pegged near the $22.75 region, which coincides with the 61.8% Fibo. level. Some follow-through selling will be seen as a fresh trigger for bearish traders and pave the way for a slide towards the mid-$22.00 mark. The XAG/USD could eventually drop to challenge the double-bottom support, around the $21.40 region.

On the flip side, any meaningful move back above the 38.2% Fibo. level, around the $23.25 region, might now be seen as a selling opportunity and cap the XAG/USD near the $23.55 hurdle. The latter marks the 23.6% Fibo. level, which if cleared decisively will suggest that the corrective slide has run its course and set the stage for a fresh leg up.

Silver 1-hour chart

Key levels to watch