• Silver consolidates the recent losses to its lowest level since July 7 touched this Monday.
• The technical setup supports prospects for an extension of a multi-week-old downtrend
• A sustained move back above the $23.20-30 confluence might negate the bearish outlook.

Silver kicks off the new week on a softer note and touches a fresh low since July 7 during the Asian session, though lacks follow-through selling. The white metal now seems to have entered a bearish consolidation phase and is seen oscillating in a narrow trading band just above mid–$22.00s. The technical setup, meanwhile, remains tilted in favor of bearish traders and suggests that the path of least resistance for the XAG/USD is to the downside.

Against the backdrop of the recent decline witnessed over the past three weeks or so, the subdued range-bound price action might still be categorized as a bearish consolidation phase. Moreover, last week’s breakdown through a short-term ascending trend line extending from June swing low and the very important 200-day Simple Moving Average (SMA) adds credence to the bearish outlook for the XAG/USD. This, along with the fact that technical indicators on the daily chart are holding deep in the negative territory and are still far from being in the oversold zone, supports prospects for a further depreciating move.

Hence, a subsequent slide back towards retesting the multi-month low, around the $22.15-$22.10 area touched in June, looks like a distinct possibility. Some follow-through selling below the $22.00 mark will expose the $21.55-$21.50 intermediate support and the $21.00 mark. The downward trajectory could get extended towards the $21.00 round figure en route to the YTD low, or levels just below the $20.00 psychological mark touched in March.

On the flip side, attempted recovery back towards the $23.00 round figure might still be seen as a selling opportunity and remain capped near the $23.20-$23.30 confluence support breakpoint, now turned resistance. The latter should act as a pivotal point, which if cleared decisively might trigger a short-covering move. The XAG/USD might then accelerate the recovery momentum towards the $23.60-$23.65 horizontal barrier before aiming to reclaim the $24.00 mark.

Silver daily chart

Technical levels to watch

XAG/USD