Silver made a new high near $22.08 and now fluctuates between losses and gains. Meanwhile, the ECB has given a surprise 50 bps rate hike despite the financial market turmoil.
As a result, XAG/USD is now trading around the $21.54 price level and has since retreated from its $22.08 high.
If we look back, Silver has attempted to cross the $22.00 price level for two consecutive days. However, it failed to hold its ground above the $22.00 and retreated despite several attempts.
This also tells us that sellers are committed to keeping the Silver below $22.00 while the buyers are shying away from making some big moves.
In addition, XAG/USD has also dropped below the 200 SMA (daily), located at $21.78. That's why we can say that major resistance is present in the form of a 200 SMA line.
So the only path that's easy for the XAG/USD is to go downwards, and that's what we are seeing in the market today.
Looking ahead, the silver (XAG/USD) nearest support is located at $21.50. After that, the next dynamic support located at 20 EMA (daily) is present near $21.29 followed by $21.
On the other hand, a close above $22.00 on the daily chart will open doors to more upside in the XAG/USD.
If we look at the fundamental situation, the global sentiment is still weak and most stock markets are bleeding red. Similarly, the ECB has raised rates since inflation is still way above the target.
We believe that Silver (XAG/USD) will find clues about its next direction from Gold and other similar assets. For now, it appears that the central banks are not ready to back out of introducing rate hikes.
And a higher interest rate means trouble for Silver (XAG/USD), Gold (XAU/USD), and other similar assets. On the other hand, a break from any new rate hikes will lend support to Silver and could push it past the $22.00 and $23.00.