- Silver picked up some dip buying Tuesday and held steady near the two-month highs.
- The technical setup favors bullish traders and supports the prospect of additional profits.
- Only a sustained break below the USD 26.00 mark will undo the constructive outlook.
Silver reversed an intraday dip in the $ 26.70 region, refreshing daily highs during the early North American session. The white metal recently hovered near two-month highs and the bulls waited for sustained move above the $ 27.00 level.
Technically, the overnight move above the $ 26.50-60 supply zone confirmed a short-term bullish breakout. This, along with the emergence of some dip buying on Tuesday, supports the prospect of additional near-term gains.
Meanwhile, the technical indicators on the daily chart maintained their bullish bias and are still far from being in the overbought territory. This confirms the constructive positioning and a possible step towards the next hurdle towards the middle of USD 27.00.
Some follow-up buying should pave the way for the recent rally to extend from the YTD lows and help the XAG / USD bulls get back to the $ 28.00 target. This is followed by resistance near the USD 28.30-35 region.
On the downside, the $ 26.60-50 resistance breakpoint now appears to be protecting the immediate disadvantage. Any further pullbacks could now be viewed as a buying opportunity near the $ 26.30-25 region. This, in turn, should help contain the downtrend near the $ 26.00 mark.
A convincing breakthrough through the aforementioned support levels will undo the positive outlook and lead to aggressive technical sales. The XAG / USD could then become vulnerable to accelerate the decline and challenge the key psychological level of USD 25.00.