If you look at my previous post about Silver on December 12, 2020, you would notice how precisely the weekly candles helped to forecast the wave and the target for wave B – the black count on the weekly chart. The last several days developed some very strong candles on the daily and weekly charts that hint towards the southbound move in the next several weeks.
Let’s look into the details.
The monthly trend continues to experience the bearish pressure from the very strong red candle developed in September. None of the following candles has been able to close above the mid-point of the September’s candle. In order to break that bearish spell, the January’s candle needs to close above 27.63. Though, I am not sure it is possible with the kinds of candles completed in the weekly and daily time frames that I will explain below.
Note that the monthly RSI does not support the bullish move as well.
The weekly pattern says that the bearish consolidation is in progress for 15 last weeks, followed by a very distinctive pattern of Falling Three Methods. Note that all weekly candles after September 28 have closed within the body of the huge red candle. The two attempts to break through the high of that candle (27.13) were rejected. The last rejection made a strong Bearish Engulfing combo on the weekly, projecting a multiple-week decline.
A daily Bearish Engulfing completed on January 6. It was followed by a very strong confirmation in the next two days, that closed below 50 and 100 MA.
I am expecting a continued decline with the target of at least 21.73, ideally 20.00 – wave C would equal wave A. As waves C often extend to 1.618 of wave A, I would not be surprised if the price falls to about 15.00.
Important! The way that the bottom target is reached would determine whether the whole correction is complete or it was just the wave (A) of a much bigger and longer correction.
If a January or February monthly candle closes below 21.81, it would likely mean that the correction is not over on the monthly time frame.
If any of the next 2-3 weekly candles closes below 21.81, it would like mean that the correction is not over on the weekly time frame.
If any weekly candle quickly falls below 21.81 and then bounces to close above, there is a chance that the correction is over. The next few Fridays would be very critical to watch.