Silver price is edging slightly after a slight improvement in the key consumer inflation data out of the US. Silver price action is trying to break a 3-day losing streak which did not see it get the best of Monday’s market capitulation.
US Core CPI came in as the markets had expected at 0.2%. The main CPI figure improved to 0.1% on a monthly basis, as opposed to the 0.0% that the markets had expected. However, my opinion is that just like most data that have emerged from February’s figures, the CPI data has not taken into account the surge in the coronavirus cases and fatalities, as well as the steep drop in crude oil prices. These two factors are expected to start showing downside pressure on inflation as the next month’s data will factor in the economic damage from the coronavirus outbreak, as effects of lower energy prices.
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Technical Outlook for XAGUSD
Silver prices on XAGUSD have been unable to break the 18.65367 price ceiling, despite three attempts from October 2019 till date as seen on the daily chart. In the same vein, 16.58888 has served as a solid price floor since it was first tested on 17 August 2019. In this range, several patterns have formed and have undergone full resolution.
The price drop witnessed in the previous three sessions was an extension of the leg down from the price ceiling, which has had to contend with several support/resistance levels. Price recovery may therefore be an opportunity to sell on rallies, so as to ride this move down to the price floor of the range as depicted on the daily chart.
Therefore, if price meets resistance at 17.18326, the door could be open for a retest of 16.58888, where a breakdown further opens the pathway towards the 16.15726 price level.
However, if the resistance at 17.,18326 is broken, we can expect to see price targeting the next resistance level at 17.41483, with 17.79883 and 18.14680 being further upside targets.
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