Silver prices has started to stabilize as the US dollar index pulls back after the recent correction in the greenback after it hit multi-year and indeed multi-decade highs against a basket of currencies.
Silver is often known as a safe-have metal, however, it still offers no yield, thus it is a non-yielding asset classes. If we continue to see the Fed raising rates aggressively it is unlikely that silver prices can head higher. Price patterns also point to more losses ahead.
I think that while the price of silver remains below the $21.00 level it is likely that traders will continue to sell rallies and the downtrend continues. Head and shoulders pattern depict a clear target of $16.000.
If the price moves below $18.50 silver prices have scope to extend towards the $17.00, $16.00. I would suggest that if gold starts to break under $1,580 then we this type of pressure on metals could be hard for the precious metals market to withstand.
Current sentiment metric towards silver show that traders remain overly bullish towards the price of silver. The ActivTrader market sentiment tool shows that 82 percent of traders are bullish towards silver.
With this one-way sentiment bias it is not bullish for silver price as retail are heavily leaning on the buy side. However, retail have been betting on silver price going up for many years now.
Silver short-term Technical Analysis
The short-term technicals for the shiny-metal shows that a huge head and shoulders pattern has taken shape, and that silver is still consolidating before a decisive break happens.
Looking more closely at the neckline break, we could probably expect more upside towards the $16.50 area if silver price break under $18.00 then $16.00 or $15.00 is possible.
Silver Medium-term Technical Analysis
The daily chart shows that silver price is in trouble over the medium-term horizon due to the fact that a huge head and shoulders pattern has yet to meet its full downside objective.
The clearly visible hold under $21.00 over recent weeks shows the break from the head and shoulders is still underway. These types of patterns often meet their eventual price targets.