- Silver gained strength for the fourth day in a row and climbed to a more than two-week high.
- The technical setup favors bullish traders and supports the prospect of further gains.
- A sustained break below the $18.60 region is needed to negate the bullish outlook.
Silver is extending its recent recovery from the June 2020 lows touched earlier this month, gaining strength for a fourth straight day on Monday. It also marks the sixth day of positive movement in the previous seven and lifts the white metal to more than a two-week high, around the $19.30 area during the first half of the European session.
Last week’s sustained breakout through the upper end of the nearly month-old descending channel and the subsequent strength behind the 100-period SMA on the 4-hour chart was seen as a key trigger for the bulls. Further technical indicators on the daily chart, they have just started to move into positive territory and continue to support a strong subsequent move up.
This means that the RSI (14) on the hourly charts is already flashing overbought conditions and may prevent traders from placing new bullish bets around XAG/USD. Therefore, it is wise to wait for some short-term consolidation or a slight pullback before targeting any further appreciative move. Meanwhile, the bias still appears to be firmly tilted in favor of bullish traders.
A convincing break through the $19.35-$19.40 level will reaffirm the constructive outlook and allow XAG/USD to accelerate momentum towards regaining the $20.00 psychological level. Another relevant resistance is established near the horizontal zone of $20.25, which, if cleared, should pave the way for further gains.
On the other hand, the round figure of $19.00 now appears to protect the immediate downside. Any further pullback can be seen as a buying opportunity and will remain capped near the 100-period SMA on the 4-hour chart, around the $18.65-$18.60 region. Support near the $18.30 area follows. A convincing break below the latter will negate the short-term positive bias.