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Technical and fundamental analysis for Silver – April 2022

Published by Karl Martin Karus in category Technical & Fundamental analysis on 18.04.2022
Gold price (XAU-SEK)
18 389,87 SEK/oz
  
- 120,87 SEK
Silver price (XAG-SEK)
213,38 SEK/oz
  
- 0,85 SEK

Fundamental Analysis

Bank of America has a positive outlook for Silver for 2022

The demand for the solar power sector and the growing importance in the auto sector will be two critical factors driving the silver price for the next three years, said Bank of America.

  • Solar power sector – Demand headwinds have been gradually tailing off, and silver usage in solar panels is set to increase further as more photovoltaic (PV) is installed,” the analysts said in the report.
  • Electric cars, according to Bank of America, will be a critical source of silver demand in the industrial sector. According to them, each electric car consumes roughly 38 grams of Silver, which is up 72 percent compared to traditional internal combustion engines.

The bank’s analysts believe that silver usage could rise to 3500t by 2025, from around 2000t in the past decade.

The bank sees silver prices ending at around 32.50 US dollars per ounce as the market sees falling supply and growing industrial demand.

Briton Hill, President of Weber Global Management, believes double-digit inflation numbers

Hill said that gold could trade between $2,500 to $3,000, and Silver could rise to $50 an ounce in the next two years.

Hill explained why he is so bullish on the commodity sector. “Commodity stocks like mining and energy companies will do great because people will continue to use their products. ” Hill pointed out that commodity prices are skyrocketing and tend to do very well during inflationary cycles,” Hill pointed out.

He also had some interesting thoughts about inflation. Hill predicts it will keep rising. “The latest Consumer Price Index report was at 7.9% for February. We will see next month’s numbers even higher because it didn’t account for rising gas, food, and other prices across the board that we have seen since the outbreak of the Russia-Ukraine war,” Hill stressed.

“I wouldn’t be surprised if we see double-digit inflation in next month’s numbers.”

Technical indicator analysis

Trendlines / Support & Resistance

*Red lines are downtrend. The heavy red line is the long-term trendline.
*
Green lines are uptrend. The heavy green line is a long-term trendline.
*
Blue lines are short term support & resistance lines

 

(Picture 1. Trendline & Support/Resistance)

  • In March’s last Fundamental & Technical Analysis article, we speculated that the silver price to fall first. The previous month’s speculations still hold, and the potential strategy remains.
  • Silver price fell from a strong resistance line around 26.3 USD/oz to 24.5 USD/oz area and touched the 250MA line (also considered as support in the current scenario)
  • We can potentially see the silver price try and touch the 26.3 USD resistance area again before consolidating and making long-term higher moves near 30 USD/oz.
  • To achieve that silver price mustn’t break the green trendline and close under the support line @23.2 area.

Moving Averages

  • In picture 1, We see that the silver price dropped near 250MA.
  • 250MA worked as a support line and silver price spiked up from there.
  • The silver price mustn’t break the 250MA line and enter a potential downtrend. If that happens, one should start looking for silver entry positions.

RSI divergence


(Picture 2. RSI divergence)

 

  • RSI indicator shows quite a steep divergence near the 250MA area, which indicates a vital buy area.
  • It is essential to watch further potential divergences forming to make additional educated speculations of possible silver price moves.

In conclusion, the long-term silver price remains very strong due to the uncertainty of the global situation and, most importantly, the need for Silver in production.

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