Silver is still moving sideways. There was an attempt to move below the flat yesterday, but it failed to consolidate lower. That is why the rectangle, where silver is traded, remains relevant. The current dynamics can be described as a horizontal correction. The price of silver is thus taking off its cumulative overbought condition, whereupon a new growth momentum is possible. This momentum could be captured when exiting the flat.
There are no significant events in the economic calendar within the next couple of days, so trading is based on the news and technical patterns.
Diverging dynamics of silver against gold is getting stronger. The current gold/silver ratio is not a record. But it is one of the drivers for silver to move higher against gold in the short term.
As a reminder, drivers for silver's growth are of the same origin as the one for gold, which is now showing outstripping dynamics.
Most analysts predict that the price of silver is going to rise this year, as it did with gold.
The Australian ANZ Bank gives silver a positive outlook for 2023. Prices for the precious metal have already risen by more than 30% since mid-October 2022. Economists from the Bank assume that despite some price correction in the near term, silver is likely to retain support from fundamentals going forward.
The supply-demand balance for the precious metal seems to be stable. The surge in demand is driven mostly by the introduction of clean energy sources. Demand for bars and coins is still high, and so is the premium for coins.
From a technical perspective, the price of silver remained within the rectangle near the lower limit, according to the results of yesterday's session. So, there is a point to open long positions again with an upside target to the upper limit of the flat. In this way, the upside target will be $24.15. Stop loss is placed near the lower limit of the rectangle, i.e. the level of $23.10.
The MACD indicator is in the neutral area, showing that the instrument is not overbought. It also confirms a signal to enter since the fast-moving average has crossed the slow-moving one.
Given the fact that the instrument is volatile and trading is moving sideways, the profit/risk ratio is approximately one to one.
Silver is likely to rise:
Take profit - 24.15
Stop-loss - 23.10