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Talking Points

  • The trend of silver prices remains downward below the March 19 high of $16.89.
  • The next support level is last week’s low of $16.32 and below it the April 18 low of $16.09.
  • The Markit U.S. Manufacturing PMI may rise to 51 from 50.8 according to a Bloomberg News poll. However, such a rise would not materially change the PMI trend, which has been drifting lower since it hit a high of 58 in August 2014.

Silver prices were, at the time of writing, bearish below the March 19 high of $16.89 and attempted to breach last week’s low of $16.32. Below last week’s low, the next support level was the April 18 low of $16.09 and the April 14 low of $15.89.

The trend is bearish below the March 19 high of $16.89, as it is one of the several swing highs created following price reaching a high of $17.36 on May 16. The preceding swing high of the March 19 high is the intraday high of $17.15, formed on the afternoon of May 18.

A more recent swing high is the March 20 high of $16.63, however, as it is short-term in nature it is more interesting for short-term traders that we focus on the bigger picture in this article.

Our forecasts for Q2 2016 are live on the site. Download them for free.

Silver Price | CFD: XAG/USD

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Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano

The Markit U.S. Manufacturing PMI may rise to 51 from 50.8 according to a Bloomberg News poll. However, such a gain would not materially change the PMI trend, which has been moving downward since the index hit a high of 58 in August 2014. The last reading of 50.8 highlighted that the sector was putting in the weakest performance since September 2009. A rise to 51 would also suggest that the average of the first two months of the quarter would be 50.9, which is lower than the average of 51.7 seen in the first quarter of 2016; hence, U.S. economic growth may have moved a notch lower in the second quarter.

This report is important for both the price of Dollar and Silver, as soft readings may delay a Fed rate hike and could thereby yield a boost to silver prices while a strong reading may have the opposite effect and trigger further silver losses.

--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com

Contact and follow Alejandro on Twitter: @AlexFX00