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Silver Looking for Support near $15 Mark

A little over a month ago, the price of silver was hovering around $16 following a strong rally from as low as $13.90 in November 2018. Many traders saw this 15% surge as a sign of even better things to come. Unfortunately for them, yesterday an ounce of silver was switching hands for about $15.

Elliott Wave analysts, however, were not that surprised by silver’s recent sharp decline. The chart below, published on January 30th, suggested the bulls’ days were numbered.

Elliott Wave analysis predicts a reversal is silver prices

The 4-hour chart of silver revealed that the rally from under $14 to roughly $16 was a textbook five-wave impulse pattern. According to the theory, a three-wave correction in the opposite direction follows every impulse. In addition, the MACD indicator showed a bearish divergence between waves 3 and 5.

So, instead of joining the bulls near the $16 mark in anticipation of more appreciation, we thought staying aside was a better decision. The expected three-wave retracement had “the potential to drag silver prices back down to $15 or even lower.” Now take a look at the updated chart below.

Price of silver fell to under $15 an ounce

Instead of a simple zigzag, the market decided to draw an A-B-C expanding flat correction, which includes a new high in wave B. The final result, however, was practically the same. On March 7th, the price dipped to $14.98 in wave C.

If this count is correct, silver’s 5-3 wave cycle is complete and the trend can now be expected to resume in the direction of the impulsive sequence. Targets above $16.25 are plausible in wave (3/C).

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