Silver prices have been rebounding alongside gold prices since last week’s FOMC policy meeting, which is unusual considering that both metals have performed poorly when QE has been tapered.
Additionally, optimism concerning US President Joe Biden’s Build Back Better stimulus plan and studies showing that infection with Omicron is significantly less likely to result in hospitalization keep risk-on sentiment elevated.
Omicron fears and their potential impact on the economy will likely be a key focus in the near term for precious metals. What the FED’s view on economic weakness and policy stance will also be key.
Any economic weakness generates doubts that the Fed will be tapering as fast as expected, this could create more upside momentum for silver prices, however, it is still speculated and early at this stage.
Any FED speak over the coming days indicating that March is still live should support USD strength, which is likely to weigh on silver prices. This makes a lot of sense, and we should also consider the events around the Build Back Better deal are also going to be key.
I would suggest keeping a close eye on the $23.400 area if silver prices continue to rise. Strength above this key technical area and we could well see a further move towards $24.00 to $25.00 region.
The ActivTrades market sentiment tool continues to show that some 97 percent of traders are bullish towards silver right now. This metric has increased since last week and is at ultra-high levels which does not bode well for silver prices as the retail crowd is often wrong and has poor market timing.
Silver short-term Technical Analysis
The short-term technicals for silver show that a breakout has taken place above key Ichimoku resistance, and the metal is likely to remain bid while trading above the $22.50 level.
According to technical analysis silver prices could stage a final move towards the $23.40 level. This could be a major turning point for silver, and failure here could cause a significant price collapse.
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Silver Medium-term Technical Analysis
The daily time frame show that the shiny metal is trading towards the key Ichimoku resistance, which appears to have a significant cluster around the $23,40 area.
According to technical analysis silver is forming a head and shoulders pattern also and move the price under the $21.00 level and we could then see downside pressure accelerate.
Overall, expect the next big move once we see the $23.40 to $21.00 price range broken with conviction.
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