During the bear market of 2012 – 2015, the trend in the market was lower and lower prices. The end of this trend was a powerful signal that a new bull market was beginning. Investors need to understand that the 30% seen so far this year, followed by the recent correction, is normal, as nothing ever moves in straight lines. The current pull back actually sets markets up for a potentially bigger move higher.
See below a textbook example of a 123 Reversal pattern:
Source: FX Traders Edge
Now compare this textbook example to a current silver chart [weekly] below:
They look identical.
The difference is silver is currently rebounding off of point (3) and has yet to break above (2), yet. The trade potential cannot be clearer from a technical perspective.
This observation, as I have suggested in my previous writings, highlights that the recent decline is nothing more than a correction within a larger bullish trend.
As for near term expectations, the markets provided us with a drop that I believe is the last phase of this correction, as I have mentioned in my previous article. We may see a lower low before this is done over the next week or so. However, I think investors should be buyers rather than sellers as this point in time.
Moreover, should we see silver jump higher through $18.50, rather than move lower in the coming months then it raises the posibility that a bottom has been made and the next leg in the rally is about to begin. Whilst I cannot rule out a further move lower, current prices in my opinion should be bought.