Silver: XAG/USD bears have the upper hand, ascending channel breakdown in play

LONDON (November 7) Silver (XAG/USD) remains on the back foot through the first half of the European session on Thursday, albeit manages to hold above the $31.00 mark. The technical setup, however, seems tilted in favor of bearish traders and suggests that the path of least resistance for the white metal remains to the downside. 

The overnight downfall and a subsequent weakness below the 50-day Simple Moving Average (SMA) confirmed a short-term ascending trend-channel breakdown. Furthermore, oscillators on the daily chart have been gaining negative traction and add credence to the near-term negative outlook for the XAG/USD. Any further decline, however, is likely to find decent support near the 100-day SMA, currently pegged near the $30.40-$30.35 region.

Some follow-through selling could drag the XAG/USD below the $30.00 psychological mark, toward testing the next relevant support near the $29.70 zone. The downward trajectory could extend further towards the $29.00 round figure en route to the very important 200-day SMA, currently pegged near the $28.50-$28.40 region.

On the flip side, the 50-day SMA support breakpoint, around the $31.35 area, now seems to act as an immediate hurdle. A sustained strength beyond could trigger a short-covering rally towards the $31.75 intermediate resistance, the $32.00 round figure and the $32.25-$32.30 supply zone. Any further move up is more likely to attract fresh sellers and remain capped near the ascending channel support breakpoint, around the $32.75 region.

FXStreet