Silver Prices Consolidate Following Last Week’s Wild Swings
- Following the sharp rise in silver prices over the last few weeks, traders have been less reluctant to push prices higher.
- Crucial events for Silver this week is U.S. GDP and the FOMC Rate Decision.
- In the short-term, the April 21 low of $16.76, formed on the heels of last week’s ECB Rate Decision, is providing support to price, while this morning’s high of $17.13 is capping price.
Following the sharp rise in silver prices over the last few weeks, traders have been less reluctant to push prices higher. Silver prices had risen by 18.76% from their April monthly low when they reached the April 21 high of $17.73. Silver prices have since then slipped lower by 4.7% this morning.
We note that the reversal on April 21 occurred near the May 18, 2015 high of $17.78, which could have long-term implications for silver given that it peaked at the same level last year. Beyond the May 18 2015 high of $17.78, the next resistance level is the 2015 high of $18.51.
Not only is silver trading near major key levels, this week could be crucial given that the FOMC Rate Decision is on tap this Wednesday and could have a strong effect on silver via the USD. John Kicklighter, Chief Currency Strategist notes that the Dollar traded higher last week, but asks if the GDP reading and FOMC Forecasts will Sustain It?
In the short-term, the April 21 low of $16.76, formed on the heels of last week’s ECB Rate Decision, is a support level. Below this level, the next potential support level is the psychological level of $16.50 and is followed by the April 18 low of $16.13.
A near term resistance level is this morning’s high of $17.13 and it is followed by the April 22 high of $17.37. As seen in the chart below, the price is consolidating between this morning’s high of $17.13 and the April 21 low of $16.76.
U.S. New Home Sales and Dallas Fed Manufacturing Activity are on deck today and may affect the price of silver. Higher than expected readings tend to exert a bullish bias on the USD (affecting silver in a negative way), while lower than expected readings may actually soften the USD (thereby giving silver the bullish bias).
Silver Price | CFD: XAG/USD
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00
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