Silver Price Analysis: XAG/USD remains depressed below mid-$27.00s, seems vulnerable

• Silver remains under some selling pressure for the second straight day, albeit lacks follow-through.
• The technical setup favors bearish traders and supports prospects for a further depreciating move.
• Any meaningful move up is likely to attract fresh sellers and remain capped near the 100-day SMA.

Silver (XAG/USD) drifts lower for the second straight day on Monday and trades below mid-$27.00s during the Asian session. The white metal, however, remains confined in a broader range held over the past week or so and seems vulnerable to prolonging the recent downward trajectory witnessed over the past month or so.

From a technical perspective, Friday's failure near the 23.6% Fibonacci retracement level of the July-August downfall and some follow-through selling validates the near-term negative outlook for the XAG/USD. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. Hence, a subsequent slide below the $27.00 mark, towards retesting the multi-month low near the $26.50-$26.45 area touched last week, looks like a distinct possibility.

A convincing break below the latter will be seen as a fresh trigger for bearish traders and drag the XAG/USD further towards the May monthly swing low, around the $26.00 mark. The white metal could extend the descending trend and eventually drop to intermediate support near the $25.60 horizontal zone en route to the $25.00 psychological mark.

On the flip side, move beyond 23.6% Fibo. level, around the $27.75 region, might trigger a short-covering rally and pave the way for some meaningful gains. The XAG/USD might then climb beyond the $28.00 round-figure mark, towards the 38.2% Fibo. level around the $28.50-$28.55 region. Any further move up, however, is more likely to attract fresh sellers and remain capped near the 100-day Simple Moving Average (SMA) support breakpoint, currently pegged near the $28.75-$28.80 area. 

The latter should act as a key pivotal point, which if cleared decisively might negate the near-term bearish outlook. The XAG/USD might then reclaim the $29.00 mark and appreciate further toward the next relevant hurdle near the $29.45 zone. The recovery momentum could extend further towards the 61.8% Fibo. level, around the $29.75 region, before bullish traders aim to reclaim the $30.00 psychological mark.

Silver daily chart