Silver prices as captured on the XAGUSD pair surged on the announcement, allowing the XAGUSD to extend its recovery from monthly lows of $11.88 to rise close to the $14 price level. Silver prices are now at $13.88, just above the immediate resistance that has been formed by previous lows of 11 September and 13 November 2019.
Silver prices are being pulled along by rising gold prices, but continue to lag this move as the absence of industrial demand continues to weigh on the metal.
The active daily candle had pulled up as far as 14.256, which is slightly less than the 38,2% Fibonacci retracement from the swing high of 24 February to the swing low of 19 March 2020. This daily candle violated the resistance at 13.83. However, it is yet to fulfil the conditions required to confirm the breakout. Therefore, silver prices continue to test the resistance at 13.83. There has to be a penetrating close above this price level by two successive daily candles to confirm the breakout. If this occurs on the charts, then the next resistance target at 14.39 (38.2% Fibonacci retracement) becomes the logical pitstop along the path of the upside recovery.
If the breakout from 13.83 is not confirmed, we may see a resumption of the downtrend move, targeting previous resistance levels that have turned support in role reversal at 13.33 (23.6% Fibonacci retracement and the peak of 23 March 2020), with 12.285 following after that.
Silver prices may look towards today’s US ISM Manufacturing PMI data for further direction.