Silver price is trading within a tight, 38-cent range in today’s trading. XAGUSD is currently trading at 12.47, slightly below where it opened at 12.60. However, with the US Senate due to vote on the government’s massive coronavirus relief program today, we could see silver price breakout of its consolidation soon.
The proposed bill would issue $1,000 to adults and $500 to US citizens as the public grapples with the coronavirus pandemic. It would also set aside $500 billion to small businesses as lockdowns across the country continue to disrupt operations. Should policymakers pass the bill, we could see XAGUSD trade lower on dollar strength. On the other hand, if the Senate faces a deadlock, the dollar could weaken and push XAGUSD higher.
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Silver Price Outlook
On the 4-hour chart, we can see that silver price has recently made lower highs and higher lows after a sharp drop. Consequently, this has allowed for a bearish pennant chart pattern to form. In forex trading, this is considered as a bearish continuation pattern. This means that a close below last week’s low at 11.62 could trigger a bigger sell-off on XAGUSD. The next floor for the commodity could be at 8.38 where it bottomed on October 2008.
Alternatively, a bullish close above last week’s highs at 13.23 could mean that there are buyers in the market that could push silver price higher. This may invalidate the bearish chart pattern and signal a potential rally to 15.58 where the trend line could offer XAGUSD with resistance (from connecting the highs of February 24, March 9, and March 11).
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