Silver (XAG/USD) Price Forecast: Critical 200-Day Support Test Underway

Deep Retracement into Structural Support Zone

Silver fell to a new retracement low of $66.16 on Monday, as it further tested a potential support zone first reached on Friday. A 78.6% Fibonacci retracement of the prior advance was completed at $67.08 and support tested near the confluence of the 200-day moving average at $67.77 and the uptrend line originating from the April 2025 lows. Although a new corrective low was reached, the support zone continued to show signs of support, reinforcing the importance of this zone. This price zone may complete the bearish correction if it is retained.

Long-Term Moving Average Defines Trend Structure

The 200-day moving average has defined long-term trend support since it was last reclaimed in March 2024, other than for brief periods below it. This is the first test of that average as support since around mid-2025. The expectation is for support to hold, eventually resulting in a bullish reversal and signs of strengthening.

Breakdown Risk and Structural Consequences

Consequently, a failure of the support zone, particularly the 200-day moving average, indicates a weakening of momentum in the long-term bull trend and suggests that sellers may be regaining control. The next lower level of interest would become the higher swing low of $61.01 from March. If it fails to hold, a bearish reversal signal would occur as the uptrend structure of higher swing highs and higher lows would be violated.

Lower Support Cascade and Reversal Framework

Since the prior more significant bullish trend continuation signal occurred on the breakout of an ascending triangle basing pattern in November, that prior resistance zone with a high of $54.49 becomes a deeper downside target if a reversal below the March low triggers. Nonetheless, at least in the short-term, Monday’s low may lead to a bounce into resistance where support was seen previously.

First, there is a prior support shelf starting near $70.87, followed by several moving averages up to the 20-day moving average at $76.31. A lower swing high at $78.83 is key structure resistance, as there will not be a reversal signal of structure until the high is recovered. This applies only to the very short-term decline contained within the larger pattern.

Inflection Point at Key Moving Average Support

Silver is on track to end Monday’s session with a potentially bullish hammer candlestick pattern and a close above the 200-day average at $67.77. A decisive breakout above Monday’s high of $68.94 would trigger the one-day bullish reversal. However, given the potential significance of the 200-day average support zone, further testing of support seems likely and would provide greater confidence that a corrective low may have been established. This creates a key inflection point, as price action around the 200-day moving average will likely determine whether the current correction transitions into a renewed advance or extends into a deeper bearish phase.

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