• Silver once again started retreating from a resistance marked by the 61.8% Fibo. level.
  • The price moves over the few trading sessions constitute the formation of a rectangle.
  • Bullish technical indicators support prospects for an eventual breakout to the upside.

Silver continued with its struggle to break through the $27.65-70 resistance zone and met with some fresh supply on Wednesday, eroding a major part of the overnight positive move. The mentioned hurdle marks the 61.8% Fibonacci level of the $30.07-$23.78 downfall and should now act as a key pivotal point for short-term traders.

Looking at the technical picture, the XAG/USD has been oscillating in a broader trading range over the past four sessions. This constituted the formation of a rectangle on hourly charts, suggesting indecision over the near-term trajectory. investors now seemed reluctant to place any aggressive bets ahead of the critical US CPI report.

Meanwhile, bullish technical indicators on 4-hour/daily charts support prospects for an eventual breakout to the upside. That said, traders are likely to wait for some strong follow-through buying beyond the $27.65-70 region before positioning for any further appreciating move. This is followed by resistance near the $28.00 mark.

A sustained strength beyond the mentioned hurdles will be seen as a fresh trigger for bearish traders and push the XAG/USD towards an intermediate resistance near the $28.80-85 supply zone. The positive momentum could further get extended and allow bulls to aim back to reclaim the $29.00 level for the first time since early February.

On the flip side, the weekly swing lows, around the $27.10 area might protect the immediate downside ahead of the 50% Fibo. level and the $26.70-60 strong resistance breakpoint. The latter coincides with a short-term ascending trend-line extending from YTD lows, which if broken decisively will negate any near-term positive bias.

The downward momentum could then drag the XAG/USD to a confluence support near the $26.20-10 area – comprising 38.2% Fibo. level and 100-day SMA. Some follow-through selling below the $26.00 mark should pave the way for additional weakness and expose the key $25.00 psychological mark, with some intermediate support near the 23.6% Fibo. level, around the $25.30-25 region.

Silver 4-hour chart

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Technical levels to watch

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