XAG / USD is clinging to modest gains near $ 25.00, not yet out of the woods
- Silver made a modest rebound from over three-month lows earlier this Wednesday.
- The technical setup still favors bearish traders and supports the prospect of additional losses.
Silver made a good intraday rebound from around the $ 24.75 area, or its lowest since April 13th touched earlier this Wednesday. The commodity held its recovery gains during Central European trading hours, but fell slightly from the daily highs and was recently traded just above the key psychological level of $ 25.00.
The extremely oversold RSI on the hourly charts proved to be a key factor triggering some short covering moves and helping the XAG / USD break three consecutive days of losing streak. However, the short term bias remains firmly in favor of bearish traders and supports the prospect of further devaluation movement.
XAG / USD confirmed a bearish break through confluence support at $ 25.70-65 this week – made up of the very important 200-day SMA and the 61.8% Fibonacci level of the upside move from $ 23.78-28, 75 USD. Some follow-up weaknesses below previous monthly swing lows of around $ 25.00 and the $ 25.00 mark made the negative outlook even more believable.
However, the emergence of some dip buying just before the interim support of $ 24.70-65 warrants some caution for aggressive bearish traders. Nonetheless, XAG / USD still appears vulnerable to extending the downtrend towards the round $ 24.00 mark before finally falling to challenge the YTD lows around the $ 23.80-75 region.
On the flip side, any meaningful recovery attempt could be viewed as a selling opportunity and runs the risk of fizzling out pretty quickly near the aforementioned $ 25.70-65-65 confluence support breakpoint. It is followed by the round figure of $ 26.00, above which the recovery could extend towards the next relevant barrier near the heavy supply zone of $ 26.40-50.