Silver prices have been on a roll for the past week, smashing through resistance levels on the XAGUSD chart. Today was another chance at silver prices to get further propulsion from the fundamentals, and this ended up as a disappointment.
Silver is an industrial metal and is one of those assets that are traditionally responsive to the measure of factory activity in countries such as the US or China. Today’s US Flash Manufacturing PMI came in at 39.8, which was slightly higher than the consensus number of 39.3 and also higher than last week’s revised figure of 36.1. However, the target needed to have elicited a vigorous, positive response on the XAGUSD pair was 42.5. The actual number did not meet this target, and silver price traders are now reacting by taking profits.
Silver price is presently trading at 16.93760, or 3.5% lower on the day.
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Technical Outlook for XAGUSD
Silver price action on the daily chart is by today’s ongoing selloff, having a hard time breaching the 17.50813 resistance level, which lies just above the 78.6% Fibonacci retracement from the swing high of 24 February to the swing low of 18 March 2020. Silver price is finding support at the 200-day moving average. A breakdown of this 200-SMA line would allow for a further drop towards 16.58888, with the possibility of new downside extension towards 16.15046 and 15.80160 if silver prices continue to weaken.
On the flip side, a bounce from the 200-SMA allows the price to retest the 16.15726 price level (78.6% Fibonacci level), and also 17.50813. A decisive breakout above this level enables the silver price to target the cluster of January 2020 highs at 18.14191. The swing high of 24 February forms another potential upside target at 18.92156.