XAG/USD defends $23.00, lacks follow-trough and remains below 200-day SMA

• Silver reverses an intraday dip to the $23.00 neighbourhood, albeit lacks follow-through.
• The technical setup warrants caution for bulls and before positioning for any further gains.
• Weakness below $23.00 will expose an ascending trend-line support or the monthly low.

Silver attracts some dip-buying in the vicinity of the $23.00 mark on Thursday and climbs to the top end of its intraday trading range during the first half of the European session. The white metal is currently placed around the $23.25 region and for now, seems to have stalled its retracement slide from the $23.60 area, or a two-week high touched on Wednesday.

The lack of follow-through, however, warrants some caution for the XAG/USD bulls, against the backdrop of the previous day’s failure to find acceptance above a technically significant 200-day Simple Moving Average (SMA). Moreover, oscillators on the daily chart – though have been recovering from lower levels – are still holding in the negative territory. Hence, it will be prudent to wait for some follow-through buying beyond the overnight swing high, around the $23.60 region, before positioning for any further appreciating move.

The XAG/USD might then aim to surpass the 100-day SMA and accelerate the momentum towards reclaiming the $24.00 round-figure mark. The next relevant hurdle is pegged near the $24.30-$24.35 region, which if cleared decisively should pave the way for a move towards the $25.00 psychological mark. 
The latter coincides with the August monthly swing high and is followed by the July peak, around the $25.25 region, which if cleared will set the stage for the recent bounce from an ascending trend line extending from the June swing low.

On the flip side, the $23.00 mark might continue to protect the immediate downside. Any further slide below the weekly trough, around the $22.95 region, could find decent support near the $22.30 region, or a nearly one-month low touched last Thursday. A convincing break below the said support levels will confirm a fresh breakdown and make the XAG/USD vulnerable. The white metal could then accelerate the downward trajectory towards the next relevant support near the $21.25 zone before eventually dropping to the $21.00 round figure.

Silver daily chart

Technical levels to watch