According to the last week's forecast, silver prices continued to move upward, gradually winning back all the losses of February and early March. At the moment the rise has stopped a little, probably at the level of $23 per ounce the number of people who wanted to fix profits has increased significantly. However, the more important target is slightly higher, at the 23.4 level. That is where the lower boundary of the flat, at which silver traded during December and January.
Attempts to break up the level of $23 in the silver market corresponded with yesterday's Fed meeting. The decision to raise interest rates by 0.25% was expected. At the same time, in the comments from members of the Federal Open Market Committee the need for some additional policy tightening was outlined. The Fed's forecast points to another hike in interest rates this year.
After announcement of the Fed meeting results, the yield on 2-year U.S. Treasuries fell from 4.259% to 3.958%. The U.S. dollar index fell from 103.265 to 102.065. All other things being equal, a decline in the dollar automatically leads to an increase in all assets nominated in U.S. currency, including silver.
At a press conference, Fed Chairman Jerome Powell expressed confidence in the sustainability of the U.S. banking system. However, after the SVB and Credit Suisse cases, lending conditions were tightened. This will put pressure on the economic activity, the labor market and inflation. Accordingly, tighter credit conditions may mean less need for the interest rate hikes by the Fed.
TD Securities analysts said that there is a high probability of silver price acceleration in case of a break above $24 per ounce. During the December-January sideways rally, the bulls repeatedly tried to get above the 23.4-24 range, but it never happened. Given the changed macroeconomic picture, the probability of success has increased, but for now it is worth focusing on a closer growth target at 23.4.
The following trading strategy option can be suggested:
Buy silver in the 22.8-23 range. Take profit – 23.4. Stop loss – 22.5.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.
This content is for informational purposes only and is not intended to be investing advice.
