Head and shoulders in silver suggest a continuation of the decline

Easing fears of more banking instability to come reduce investment demand for silver. The metal’s slump may continue in the near term as the outlook on the crisis appears to be subdued now. 

In the period of silver's rally, when banks were having major issues, analysts talked about funds shifting from risky assets (like oil) to safe-haven ones. 

The energy markets have also been hit by the changes. Oil prices fell to the lows of December 2021, and they are expected to keep sliding in the short run. 

Standard Chartered believe that the crash of black gold took place due to increased hedging operations. The market saw strong sales of crude oil and gasoline with a view to transfer these proceeds back to the precious metals.

Now that fears seem to be receding, there could be a reversed situation, i.e. cash outflows from protective assets to the risky ones. Oil prices have almost sealed the decline caused by the banking crisis. 

Brent crude oil, daily timeframe

The white metal proves to be highly demanded among European haute couture houses, according to the Silver Institute. This year, there will be a moderate demand for jewelry made from the precious metal, even if the level is lower than the record highs of 2022. Demand is likely to be down 10% as the Indian market stabilizes in 2023.

The appetite for silver could be weaker than last year. Taking into account economic uncertainties, demand could be revised downward.

Based on the technical analysis on the 1-hour timeframe, a figure of head and shoulders has been formed. In case the neck level is broken down, the target will be the size of this figure. This target coincides with a strong bullish start to the acute phase of the banking crisis last week.

Now the possibility to open short positions in silver has come off.

The target can be the level of $22.30. Stop loss is placed when the neck level is breached upward at $23.22. 

Silver is likely to decline:

Take profit – 22,30

Stop-loss – 23,22