Silver Carves A Potential Top Around $36.00?

7 August 2020

Silver has taken most traders by surprise after producing an impressive rally since March lows around $11.70 handle. The metal has raised through $30.00 levels today before reversing sharply lower. It is trading around $28.30 as we write this article and could be preparing to continue lower.

Silver probable wave counts are as under: The metal has been unfolding as an expanded flat since December 2015 lows around $14.05 levels. An expanded flat is often referred to as a traders’ nightmare as it goes beyond price extremes giving false breakouts.

As noted here, Wave B for Silver had dropped below the price extreme around $14.50 levels and carved yet another low around $11.70 in March. This move created a false notion of a potential breakout lower.

It is important to note that an expanded flat is a 3-3-5 structure where Waves A and B sub divide into 3 waves each followed by a sharp reversal as Wave C unfolds into 5 waves. As noted on the chart, after Wave B lows around $11.70, Silver has managed to carve Wave C higher towards $30.00 levels.

Please note that the recent rally is just a part of the expanded flat 3-3-5 structure, which seems to have completed around $30.00 mark. If the above described corrective wave structure holds well, Silver should remain below $30.00 and reverse sharply lower toward $11.70 at least.

Traders might be inclined to initiate fresh short positions around current levels $28.20/50, with protective stops above $30.50 and projected targets below $11.70 respectively. A break above $30.00 would delay matters further.

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