Silver price traded higher in yesterday’s trading following the Fed’s surprise 50 basis-point rate cut. Today, the technical setup of XAGUSD suggests that the precious metal still has some room to trade higher.
The hourly time frame shows that the rally on silver price was enough to break resistance at the falling trend line (from connecting the highs of February 24 and February 27). In the last few trading hours, XAGUSD has consolidated. Consequently, a bullish pennant chart pattern has materialized. In forex trading, this chart pattern is considered as a bullish continuation signal. A break above yesterday’s high at 17.44 could mean that silver price will trend higher.
The 4-hour chart reveals that near-term resistance is at 17.81 where the 100 SMA and 200 SMA could limit any upward movement on XAGUSD. By drawing the Fibonacci retracement tool from the high of February 24 to the low of February 28, we can see that this price also coincides with the 50% and 61.8% Fib levels.
On the other hand, a downside break of the consolidation below yesterday’s New York session lows at 17.00 could trigger a drop on XAGUSD. Silver price could then fall to its February lows at 16.40.