Silver Price Forecast: XAG/USD retakes $30.00 mark; setup warrants caution for bulls

• Silver gains positive traction for the second straight day, though the upside seems limited.
• The recent decline along a descending channel points to a well-established downtrend.
• Neutral oscillators on the daily chart further warrant some caution for bullish traders. 

Silver (XAG/USD) attracts some buyers for the second straight day and climbs back above the $30.00 psychological mark during the first half of the European session on Wednesday. The technical setup, however, warrants some caution for bullish traders and before positioning for any further appreciating move.

The recent pullback from the vicinity of the $35.00 mark, or a multi-year peak touched in October, has been along a descending channel, which points to a well-established downtrend. Moreover, oscillators on the daily chart – though have recovered from bearish territory – are yet to gain positive traction. Hence, any subsequent move up might continue to confront some hurdle near the top boundary of the said channel, around the $30.45 region. 

This is followed by the 100-day Simple Moving Average (SMA), currently pegged ahead of the $31.00 round figure. A sustained strength beyond the latter will suggest that a nearly three-month-old corrective decline has run its course and pave the way for further gains. The XAG/USD might then accelerate the positive move towards the $31.70 intermediate hurdle en route to the $32.00 mark and the December swing high, around the $32.30-$32.35 region. 

On the flip side, the weekly trough, around mid-$29.00s touched on Monday, could offer immediate support. A convincing break below will reaffirm the negative setup and make the XAG/USD vulnerable to weaken further below the $29.00 mark, towards retesting the $28.75-$28.70 support, or a multi-month low touched in December. Some follow-through selling will be seen as a fresh trigger for bearish traders and pave the way for a further depreciating move.

Silver daily chart