The silver price is continuing its sideways movement, in which we successfully traded before. The quotes don’t seem to catch up with increasing gold, though growth factors for gold prices also have a positive effect on silver as well. These factors are cooling headline inflation and potential reverse of global central banks in relation to their key rates. China’s reopening is also important, as the country’s is world’s largest consumer of silver.
Not all analysts expect a definite rise of silver to happen during this year. MRS PAMP Group experts see a chance of the silver price movement. There’s a 50% chance that the price will move sideways within a range of $18-$28. A possibility of growth to the level of $30 is estimated at 35%, while there’s also a 15% likelihood of a decline to $12. The average price is estimated to be $22.5 during the year.
Despite a slowdown in headline inflation, the ECB isn’t going to let up in efforts to fight it, as premature rate decreasing might push inflation to new highs. It is a negative factor for the price of silver, which is already showing weak dynamics in comparison with gold.
As it was said by Lagarde at a panel in Davos on Thursday, inflation remains high by all accounts, no matter which way it is looked at. She said that the ECB will stick to its course of monetary policy until it reaches the rate level at which it will be possible to return inflation to 2% in a timely manner.
According to the tech analysis, the silver price has completely gone into sideways movement within a range of $23.3-$24.5. The upward trend of silver was broken at the year’s start. Considering the RSI on the hourly timeframe, the overbought zone is reached again, so there’s a possibility for opening short positions.
When the price is moving sideways, overbought/oversold signals on oscillators work much better than in the case of one-way trending. After all, if a trend is strong, overbought or oversold conditions can persist for a long time.
In our case, a range at the bottom of the trend near the level of $23.30 will be the target of silver declining. Thus, stop loss is set near the upper limit at $24.55.
A decline in the silver price:
Take profit – 23.30
Stop-loss – 24.5