Silver Price Analysis: XAG/USD remains vulnerable, acceptance below $20.00 awaited
NEW YORK (March 9) Silver struggles to gain any meaningful traction and extends its sideways consolidative price move around the $20.00 psychological mark through the mid-European session on Thursday. The white metal, meanwhile, remains well within the striking distance of over a four-month low touched on Wednesday and seems vulnerable to prolonging its downward trajectory witnessed since early February.
The recent breakdown through a technically significant 200-day Exponential Moving Average (EMA) was seen as a fresh trigger for bearish traders. Furthermore, this week's sustained weakness below the $20.50-$20.40 horizontal support, which coincided with the previous YTD low, adds credence to the negative outlook. This, in turn, suggests that the path of least resistance for the XAG/USD is to the downside.
That said, Relative Strength Index (RSI) on the daily chart is hovering in the oversold territory. Moreover, repeated failures to find acceptance below the $20.00 psychological mark make it prudent to wait for near-term consolidation before placing fresh bets around the XAG/USD. Nevertheless, the metal's inability to attract any buyers suggests that the near-term descending trend is still far from being over.
Hence, a subsequent slide towards testing the $19.60 intermediate support, en route to the $19.00 round-figure mark, looks like a distinct possibility. Some follow-through selling should pave the way for a slide towards the next relevant support near the $18.80-$18.75 region before the XAG/USD eventually drops to $18.30-$18.25 horizontal zone and the $18.00 level, which should offer strong support.
On the flip side, the $20.40-$20.50 support breakpoint now seems to act as an immediate barrier. Any further recovery is likely to attract fresh sellers and remains capped near the 200-day Simple Moving Average (SMA), currently pegged just ahead of the $21.00 mark. The latter should act as a pivotal point, which if cleared decisively could lift the XAG/USD to the mid-$21.00s. Bulls might then aim to reclaim the $22.00 mark.
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