XAG/USD drops to near two-month low, 100-day SMA breakout
Silver (XAG/USD) attracted some follow-through selling during the Asian session on Thursday and dropped to its lowest level since September 19 in the last hour. Bearish traders now await a sustained break below the $30.00 psychological mark before positioning for an extension of the recent sharp decline from 12-year tops touched last month.
An overnight close below the 50% Fibonacci retracement level of the August-October rally and a subsequent break through the 100-day Simple Moving Average (SMA) for the first time since September could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart have been gaining negative traction and are still far from being in the oversold zone. This, in turn, suggests that the path of least resistance for XAG/USD remains to the downside and supports prospects for a further depreciating move.
The white metal could then accelerate the fall towards the 50% Fibo. 61.8%, around the $29.65-$29.60 region. The downward trajectory could extend further towards the $29.20-$29.15 region before XAG/USD eventually breaks below the $29.00 level and tests the technically significant 200-day SMA, currently pegged near the $28.65 zone.
On the flip side, any meaningful recovery attempt might now confront a stiff barrier near the $30.60 region (50% Fibo. level). However, some follow-through strength could trigger a short-covering rally and allow XAG/USD to reclaim the $31.00 level, though the momentum is likely to remain capped near the $31.20 support-turned-resistance. The latter should act as a key pivotal point, which if broken decisively will suggest that the commodity has formed a near-term bottom and pave the way for additional gains.
Source: FXStreet
