Silver has produced an impressive rally since dropping to $11.50 lows in March 2020. It would have been difficult for most traders to perceive such a sharp reversal in a short span of time. We would warn most traders against being too optimistic yet.
Let us look at potential wave counts on the daily chart presented here. The drop between $19.65 and $11.50 has been in 3 waves A-B-C, hence corrective. A 3 wave movement could be a part of a larger correction or indicate beginning of a new trend.
Interestingly, the rally from $11.50 through $18.50 has also been in 3 waves A-B-C, hence corrective until now. If Silver unfolds into 5 waves, then it would confirm an impulse and also the beginning of a new uptrend. Until that happens, it would be too early to become optimistic.
The overall potential wave counts represent a 3-3 wave structure between $19.65 and $18.50, until now. This could be seen as a part of a potential triangle or an ending diagonal, going forward. A triangle is a corrective structure which consists of 5 waves (a-b-c-d-e) and each wave sub dives into 3 waves. While an ending diagonal is a motive wave, which consists of 5 waves (1-2-3-4-5) and each subdividing into 3 waves.
It remains to be seen whether Silver is unfolding into a triangle consolidation or a diagonal bur probabilities are high for a reversal from here against $19.65 levels.
Technical Analysis Team
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