Silver price on the XAG/USD chart is up 1.66% this Wednesday with just a few hours to the latest consignment of the Fed’s interest rate decision. This latest move keeps the price action within the consolidation area of an emerging price pattern as traders wait for the Fed’s move to establish new direction for the pair.
The predominant bets in the market are for the Fed to raise interest rates by 75 basis points, in response to last week’s shock uptick in consumer inflation. There are also outside calls that the Fed could raise rates by as much as 100 basis points, but these are in the minority. Has the market expectation been priced into the latest XAG/USD price action? It would not appear to be so.
From a technical perspective, we have a price pattern that presently goes against the market narrative. The pattern’s completion according to expectations will require some sort of disappointment from the Fed. If the Fed exceeds expectations, the pattern will stall, and traders will have to follow the news. Expect some XAG/USD pair volatility, especially during the FOMC Chair’s speech.
The violation of the 19.463 resistance (7 July high) has been capped at the upper border of the evolving pennant pattern. A 3% closing penetration above the 19.463 resistance will breach the pennant’s upper border, completing the pattern and clearing a pathway toward a potential measured move that targets the 20.985 resistance (13 June low).
This measured move must transcend the barriers at 20.212 (5 July high) and 20.661 (24 June low and 8 August high) to attain completion. 21.248 and 21.915 (21 June high) are additional targets to the north if the silver recovery move is extensive.
On the flip side, the bears would need to force a decline that breaks down the 18.935 support (6 July low and 9 September high) before the downside move can resume. This move would target 18.553 initially, being a previous low of 29 August 2022. Below this level, the 18.213 support (15 July low and 5 September high) and 17.548 pivot (1 September low) form additional harvest points for the bears.
This post was last modified on Sep 21, 2022, 17:38 BST 17:38