Silver Seems Vulnerable To Fall Further Below The $31.00 Level
Silver (XAG/USD) adds to the previous day's heavy losses and attracts some follow-through selling for the second successive day on Friday. This also marks the fifth day of a negative move in the previous six and drags the white metal to a one-month low, around the $31.15 region during the first half of the European session.
With the latest leg down, the XAG/USD confirms a breakdown through a multi-month-old ascending channel and now seems to have found acceptance below the 50% Fibonacci retracement level of the December-March move-up. Furthermore, oscillators on the daily chart are holding deep in negative territory and are still far from being in the oversold zone, suggesting that the path of least resistance for the white metal is to the downside.
Hence, a subsequent fall towards testing sub-$31.00 levels, or confluence of support consisting of the 200-day Simple Moving Average (SMA) and the 61.8% Fbo. level, looks likely a distinct possibility. A convincing break below the said support will be seen as a fresh trigger for bearish traders. This would pave the way for an extension of the recent sharp retracement slide from the $34.55-$34.60 region, or the year-to-date high touched on March 28.
On the flip side, any recovery is above the 50% Fibo. level, around the $31.65-$31.70 region, could be seen as a selling opportunity and remain capped near the $32.00 round-figure mark, or the ascending channel support breakpoint. However, some follow-through buying, leading to a further move up beyond the $32.30-$32.35 region (38.2% Fibo. level), might prompt a short-covering rally and allow the XAG/USD to reclaim the $33.00 mark.
Source: FXStreet
