Silver Price Forecast: XAG/USD nosedives to near $21.50 as US Dollar strengthens, upbeat US data

Silver price dives perpendicularly to near $21.50 amid strength in the US Dollar.
The US Dollar eyes more upside as the US Manufacturing PMI outperformed expectations but remained below the 50.0 threshold.
Silver price delivers a breakdown of the Head and Shoulder pattern, which results in a vertical sell-off.

Sagar Dua FXStreet

Silver price (XAG/USD) faces an immense sell-off as the United States Institute of Supply Management (ISM) reported a higher-than-anticipated Manufacturing PMI for September. The economic data landed at 49.0, much higher than estimates and the former release of 47.7 and 47.6 respectively.

In spite of upbeat factory activities, the Manufacturing PMI remained below the 50.0 threshold for the 10th time in a row. The New Orders Index for the US factory also outperformed expectations and jumped to 49.2 from the August reading of 46.8.

The US Dollar Index (DXY) recovered its entire gains, and jumped to near 106.80, as the market mood dampened after weak Caixin Manufacturing PMI data for September. China’s factory activities missed estimates by a wide margin but managed to remain above the 50.0 threshold. The economic data landed at 50.6 lower than estimates and the August reading of 51.2 and 51.0 respectively.

The US Dollar is expected to remain volatile ahead of the speech from Federal Reserve (Fed) chair Jerome Powell. Investors anticipate a hawkish interest rate guidance as the United States economy is resilient. The US economy is outperforming other developed economies due to upbeat labor market conditions, robust consumer spending, and strong wage growth.

Silver technical analysis

Silver price deliver a breakdown of the Head and Shoulder chart pattern on a daily scale, which results in a vertical sell-off. The white metal breaks sharply below the neckline of the aforementioned chart pattern plotted from June 23 low at $22.11. The declining 20-day Exponential Moving Average (EMA) at around $23.00 indicates that the short-term trend has turned bearish.

The Relative Strength Index (RSI) (14) slips into the bearish range of 20.00-40.00, which warrants more downside.

Silver daily chart

XAG/USD

Overview
Today last price	21.43
Today Daily Change	-0.76
Today Daily Change %	-3.42
Today daily open	22.19

Trends
Daily SMA20	23.07
Daily SMA50	23.44
Daily SMA100	23.51
Daily SMA200	23.45

Levels
Previous Daily High	23.56
Previous Daily Low	22.12
Previous Weekly High	23.65
Previous Weekly Low	22.12
Previous Monthly High	24.82
Previous Monthly Low	22.12
Daily Fibonacci 38.2%	22.67
Daily Fibonacci 61.8%	23.01
Daily Pivot Point S1	21.69
Daily Pivot Point S2	21.18
Daily Pivot Point S3	20.24
Daily Pivot Point R1	23.13
Daily Pivot Point R2	24.07
Daily Pivot Point R3	24.58

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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