The price of silver fell to as low as 13.64 on December 14th, 2015, and has been rallying ever since. On March 18th, 2016, the precious metal climbed to 16.13 and seems to still be in an uptrend. But is this the right time to join the bulls on their way up? Could we expect a reversal to the south soon? In order to answer these questions, let’s apply the Elliott Wave Principle to the 4-hour chart of silver and see if the market is giving us a hint through the price swings.
As visible, the whole recovery since the end of last year could be counted as a five-wave impulse. There is a couple of leading diagonals in waves (1) and 1, followed by the most powerful phase of the uptrend in wave (3). Then, the selling pressure reappeared in the face of wave (4), which could be labeled as a simple a-b-c zig-zag, where wave “b” is an expanding triangle. As soon as wave (4) bottomed out at 14.60, the bulls returned for wave (5) up, which so far looks like an ending diagonal.
In other words, silver’s impulsive sequence, which has been in progress for over three months, seems to be in its final stages. According to the Wave principle, every impulse is followed by a three-wave correction in the opposite direction. The bulls would probably manage to achieve one last new high, but in our opinion, now is definitely not the right time to join their lines, because once wave (5) is over, silver should head south for a significant pull-back. However, picking tops is never recommended. Instead, traders would be better off waiting for the lower line of the diagonal to be broken, which is going to confirm the reversal.
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