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Silver prices are at a critical juncture against the US Dollar as Federal Reserve Chair Jerome Powell removed a key part of the bank’s policy language, causing the shiny metal to crash from $23.30 to $22.70.
The ever-popular metal fell to the lowest since mid-October this year, while the Gold/Silver Ratio back below 78 after the relative measure of the 2 precious metals’ prices touched the highest since September earlier on Tuesday.
At the moment the traders are not gold versus silver, but whether or not both metals crumble against the US dollar further as the FED looks to raise rates and increase the speed of tapering.
Digging into Powell’s speech, the US central bank head said, “The word transitory has different meanings to different people,” and “I think it’s probably a good time to retire that word and try to explain more clearly what we mean.”
The Omicron variant of Covid has also caused precious metals to come under pressure, so the threat of more tapering and Omicron are probably a drag on both metals for now.
However, the $1 trillion plus Build Back Better plan has ignited silver bulls hopes due to the fact that silver is likely to be heavily used in some of the components needed inside the green energy focused plan. So many factors are in the mix.
From a technical perspective, the lows of September are holding, and the $22.80 level is a key area to watch. Bulls continue to defend this area, providing some hope that the metal can still recover higher.
The ActivTrader market sentiment tool shows that some 94 percent of traders are bullish towards silver right now. This is a 11 percent rise in bullish sentiment since last week. This does not bode well for silver buyers.
Silver short-term Technical Analysis
The short-term technicals for silver show that a large, inverted head and shoulders pattern has formed, and the metal now looks to be forming a final right-hand shoulder.
According to the overall size of the typically bullish pattern silver price could be due a further $3.00 rally in the short-term. Watch out for more gains towards the $28.00 level above the $24.90 level.
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Silver Medium-term Technical Analysis
The daily time frame show that the metal is trading towards the bottom of a large broadening wedge pattern. A bounce from the bottom of the pattern and silver price could go much higher over the medium-term.
According to technical analysis silver could be headed towards the $31.50 level if bulls are able to hold to level. A break above the defend the $21.80 level. A move towards the top of the triangle would be huge for silver bulls.
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