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Silver could retest sub-$22.00 levels, or two-month trough

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Silver is struggling to capitalise on Thursday’s modest bounce from a two-week low. The technical setup favours bearish traders and supports prospects for additional losses.

A sustained strength beyond the 200-day SMA is needed to negate the bearish outlook.

XAGUSD attracted some sellers following an intraday uptick on Thursday and for now, seems to have stalled its modest recovery from the $22.30-$22.25 region, or a two-week low touched the previous day.

The white metal traded just below the mid-$22.00s during the first half of the European session and seemed vulnerable to sliding further.

The recent failure to find acceptance above the very important and significant 200-day Simple Moving Average (SMA) and the subsequent slide from a multi-week high, around mid-$23.00s touched on February 16, validates the negative outlook.

Moreover, oscillators on the daily chart have just started drifting in the negative territory and support prospects for a further near-term depreciating move for XAGUSD.

That said, it will still be prudent to wait for some follow-through selling below the overnight swing low, around the $22.30$22.25 area before placing fresh bearish bets.

XAGUSD might then accelerate the fall towards retesting sub-$22.00 levels, or a two-month low touched in January. The downward trajectory could extend further and drag the white metal to the next relevant support near the $21.40-$21.35 region.

On the flip side, the daily peak, around the mid-$22.00s, might continue to act as an immediate hurdle ahead of the $22.70-$22.75 region.

This is followed by the $23.00 round-figure mark, which if cleared decisively might trigger a short-covering rally, though the momentum runs the risk of fizzling out near the 200-day SMA, currently around the $23.30 zone.

This should cap the upside near the mid-$23.00, or the monthly peak.

Silver daily chart by TradingView

(Source: OANDA)