It now looks like silver has completed a classic 3-wave correction from its May highs, following its strong advance in the Spring. On its latest 6-month chart we can see that it appears to be conforming to a classic Elliott wave pattern which consists of 5 waves up in the direction of the primary trend, as numbered, followed by a 3-wave correction or reaction that once complete is followed by another series of up waves.
The correction phase is considered to be complete or very close to complete – while it could react back further short-term towards the support level shown in the vicinity of the 200-day moving average which would not cause any technical damage, the overall pattern is strong and given that we will soon enter a seasonally favorable time of year for the Precious Metals, there is a good chance that it won’t react back much further, if at all.
Thursday’s breach of support will have thrown some investors and triggered stops, and may turn out to be the sort of “head fake” that frequently precedes a sizable advance. The dynamic in play here is that “Big Money” whacks the price through a support level to trigger stops and then they mop up the disgorged holdings ahead of renewed advance. If this is what is going on then it is of course very bullish.
So, whilst acknowledging the possibility of a little more downside short-term, the main message here is that silver is now in buying territory again with a major advance to a point way above the May highs on the horizon.
End of update.
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