Rectangle in silver gives an opportunity for a quick move down

Silver formed a new flat movement on the hourly timeframe. Recall that recently there was an exit down from the rectangle, which was relevant for the last two months. The reason for the decline was the strong report on employment in the U.S., as well as hawkish statements by Fed members after the report.

Strong indicators of the U.S. labor market put pressure on precious metal markets. Therefore, the experts of Commerzbank updated price forecasts for silver, platinum and palladium.

Analysts at the bank forecast silver at $23 by the middle of 2023 and at $25 by the end of the year.

According to forecasts by investment houses, the potential for silver growth is limited at $23. It can be said that these targets already have been achieved this year.

Rafael Bostic, president of the Federal Reserve Bank of Atlanta, said that a strong report on employment for January makes it more possible that the central bank will have to raise interest rates to a higher level than previously expected by politicians.

A higher peak in the rate could be achieved by an additional one-quarter point increase over the two points currently anticipated. Bostick said that the Fed might also consider the possibility of returning to a 50 basis point rate hike, although he does not expect it.

The head of the Fed, Powell, also confirmed his commitment to raise the key rate.

According to the technical analysis, silver formed a new rectangle on the hour timeframe. Since the volatility of the new flat movement is quite small, the probability of exiting it in the near future is quite high. Unlike gold, which was able to form a flag pattern, silver's uptrend failed. This fact confirms the weakness of the metal in the current market situation.

Nevertheless, just as in gold, it is possible to win back the current movement inside the rectangle. Since silver is closer to the upper boundary, it can be tried to open short positions to reach the lower boundary. This is the $22.2 level. Stop-loss can be set at the upside exit from the current flat around $22.62.

Decrease in the price of silver:

Take profit – 22.20

Stop-loss – 22.62