XAGUSD: Silver Price Action Muted As Coronavirus Fears Dissipate
Market action is calmer on the XAGUSD, as silver prices remain stable in Friday trading following the WHO statement which calmed fears of the coronavirus outbreak. Lack of risk appetite does not appear to have lured traders who are bullish on silver prices back into the XAGUSD pair, and this is hampering further upside movement. Some, of the lack of action, has been the effect that the coronavirus has had on China, whose industries consume a significant proportion of the world’s raw material ores, including silver. The Chinese New Year also kicks off this weekend, and traditionally this is a period when industrial activity in China tends to slow down.
XAGUSD is presently trading at 17.83112, which is slightly higher on the day.
The measured move from the recent falling wedge became complete when silver price action hit the resistance at 18.65367. However, prices have been locked in a consolidation range which resembles the pennant component of a bullish pennant pattern. The pole of the pennant is the recent upside breakout and measured move to the 18.65367 resistance.
Therefore, silver price activity may consolidate further and eventually break out of the pattern. The technical expectation is for a bullish break, which allows silver prices retest the 18.65367 once more. This breakout move would also take out the nearest horizontal resistance that lies close to the pennant border at 18.14680.
On the flip side, a breakdown below the pennant targets the nearest support at 17.41483. 16.80485 is the next support level that comes into focus if the 17.41483 support level is breached to the downside.