Silver prices continues their pullback after a mild contraction of the US ISM Manufacturing PMI data piece. According to data released a short while ago, the US ISM Manufacturing PMI fell from 50.1 a month ago to 49.1 for March 2020. This result was not as bad as the markets had feared. The market expectation had been for a contraction to 44.9.
The figures mean that the drop in manufacturing activity in the US, though not as bad as initially feared, is reflective of declining factory conditions brought on by the shuttering of factories, disruption of the supply chain and lockdowns enforced as a result of the coronavirus pandemic. The resultant effect is that while the data release will allow the US Dollar to experience some reprieve, industrial metals will continue to suffer as a result of lack of demand.
Silver prices on the XAGUSD weekly chart are 3% lower and currently trading at 14.03429.
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Technical Outlook for XAGUSD
Silver prices are represented on the XAGUSD charts. A look at the weekly charts shows that this week’s price decline is testing the support at the 13.97860 price level. This price level is also the site of previous lows that formed a double bottom in September and November 2018. A breakdown of this support introduces sellers to a possible new price target, located at 12.28547 (previous low of the week ended 23 March 2020). However, the 23.6% Fibonacci retracement level at 13.33319 could be an intervening pitstop.
On the flip side, any price recovery attempt has to get past 14.37184 (the 38.2% Fibonacci retracement from the 17 February 2020 highs to the 16 March 2020 lows). This immediate resistance is also where the lows of 13 August 2018 and 13 May 2019 reside. A break of this price level to the upside enhances the possibility of recovery to 15.00492.