- Summary:
- Why is silver price action continuing to the upside despite poor IHS Markit Flash Manufacturing data? A look at the XAGUSD daily chart may provide insight.
Silver price is turning higher and poised to register a winning end for the 2nd day in a row, despite a record decline in private sector business activity for April 2020. The HIS Markit Flash Manufacturing PMI data came out at 36.9 versus the market consensus of 35.1. The figure represents a decline from last month’s revised number of 48.5, so it is still a matter of conjecture on whether silver price action may find limited upside or not.
Today’s silver price action is the 2nd day of the interruption of the downtrend break from the rising wedge pattern on the daily chart. The US Congress plans an additional stimulus package and the vote comes up later today. Already, some US governors are mulling opening their economies as from next week after several weeks of closures as part of measures to contain the spread of the coronavirus pandemic. These plans may be giving investors hope that industrial activity in the US could pick up in the weeks ahead, and this is probably the reason behind the upbeat price action on the XAGUSD pair.
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Silver Price Action Outlook
The upside currently seen in the silver price action on the daily chart of the XAGUSD will have to contend with the resistance level at 15.25913 (50% Fibonacci retracement from the swing high of 24 February 2020 to the swing low of 18 March 2020. Only a clean break above this price level brings new resistance targets at 15.61355 and 15.80160 into focus. 16.15726 is the 61.8% Fibonacci retracement level that is expected to become a new target of the resistance at 15.80160 is breached.
On the flip side, inability of silver price action to sustain the upside momentum leaves it prone to rejection at the current price level, or at the 15.61355 price barrier. This may provide for a pullback which retests the recent lows that constitute the support at 15.00492. A breakdown of this support level opens the door towards 14.63304 and possibly 14.37184, which completes the price projection move from the initial rising wedge breakout.