After nearly three months of moving sideways since July 4th, silver is near the end of its correction and ready to move on. The chart below shows that a classic flat wave has panned out and is now either ended or very close to it.
The ABC of a flat wave is a common Elliott Wave pattern characterized by an initial zigzag wave down (our “A” wave) followed by a similar but upward B wave rally. The move inevitably closes with an impulse C wave which tends to finish lower than where the A wave finished (here at $19.20).
Studies of falling commodity prices suggest the C wave can be up to twice as long as the initial A wave, but it is anticipated that the $18 level set on the May 2nd should act as support. The probabilities point to a further drop to this $18 level; but that should be a temporary phenomenon as silver presses onto new highs.
As an added boost, most silver seasonality charts point to September as a strong month for silver and that is the hope this article holds as we look for notable silver strength for at least the next month. What happens beyond that will be discussed with subscribers.
Further analysis of silver can be had by going to our silver blog at http://silveranalyst.blogspot.com where readers can obtain subscription details for the Silver Analyst newsletter. A free sample copy can be obtained by emailing silveranalysis@yahoo.co.uk.
