Silver meets with a fresh supply on Wednesday and remains on the defensive through the early European session. The white metal is currently placed just above the $19.00 mark and seems vulnerable to slide further.
The overnight recovery move from the vicinity of the monthly low struggled to find acceptance above the 61.8% Fibonacci retracement level of the July-August rally. The subsequent pullback suggests that the bearish pressure might still be far from being over.
Furthermore, technical indicators on the daily chart are holding deep in the negative territory and are still far from being in the oversold zone. This adds credence to the bearish outlook and supports prospects for a further depreciating move for the XAG/USD.
Hence, a decline back towards the weekly low, around the $18.70 region, en route to the next relevant support near the $18.45-$18.40 area, remains a distinct possibility. The downward trajectory could drag the XAG/USD to the YTD low, around the $18.15 zone touched in July.
On the flip side, the overnight swing high, around the $19.25-$19.30 area, now seems to act as immediate resistance. Any further recovery could be seen as a selling opportunity and remain capped near the $19.40-$19.50 area, which coincides with the 50% Fibo. level.
The latter should now act as a pivotal point, which if cleared should lift the XAG/USD to the $19.85 confluence, comprising of the 50-day SMA and the 38.2% Fibo. level. Some follow-through buying beyond the $20.00 mark will suggest that spot prices have bottomed out.
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