Silver prices have been trading at historic lows just after reaching the peak of 33 earlier this year. In our weekly technical analysis of Silver, there are some interesting trade formations. All analysis points to a continued bearish bias for Silver on the short term outlook, but a bullish bias on the longer term.
In the chart below, we have two Wolfe Waves plotted on the 4 hour time frame chart. Click to enlarge the picture.
The Orange Wave points plotted make the smaller or short term Wolfe Wave, while the Gray Wave points plot the intermediary Wolfe wave.
We see price making a swing high at 29.32. Wave 5 marks an important level because both the short term and medium term wolfe waves mark this level at wave 5. Incidentally, the price point of 29.227 also marks the weekly resistance level 1 (identified by the red horizontal line), which has been breached. Thus, this region would be ideal to set our stop losses. The likely stop level would be 29.32, just below today’s daily resistance level of 29.40
On the downward ride for Silver, the key levels would be 28.88 region which marks the weekly pivot point (identified by the gray horizontal line). For those already in the trade, look to booking your profits at the 28.886 region.
The short term Wolfe wave points to Silver reaching lows of 27.94 (marked by the horizontal and vertical dashed orange lines). However, it would be safe to state that Silver could possibly be trading in the regions of 28.57 – 28.54 (which is the weekly support level 1 and swing low for pivot wave 4) through 28.08 (which marks the weekly support level 2) which is the shaded area.
Considering that there are two key price points, it is unlikely that the short term or the medium term Wolfe wave projections will be accurate in regards to the estimated price and also the fact that the long term Wolfe wave points to a bullish bias.
Switching to the daily time frame chart, we see some interesting developments. Click on the chart to enlarge.
Wolfe Wave points to a bullish bias, with a possible price rally happening towards end of March and early April. Prices are projected in the region of 30 – 33. However, we have the monthly resistance at 31.0 thus this could be seen as the first realistic take profit regions.
Combining both the short term/medium term wolfe wave price projections and building up a long term trading strategy for Silver, this is what we conclude.
Expect Silver prices to drop to weekly support level 1 at 28.42 (with a possible trading in the region of 28.42 through 28.08) before retracing this downward move.
An ideal entry for the longer term trade would be to look at the pivot points for next week and enter at new support level 1.
While the overall fundamentals in the market is quite bearish and also the fact that the ECB has given a deadline for Monday to Cyprus to resolve its banking crisis, we conclude this analysis by stating that the technicals give us possible price points, but most likely it will be the fundamental sentiments that will be dictating the direction for Silver price next week.
Traders should bear in mind the following.
Short term and medium term wolfe waves are bearish. The estimated time when prices will bottom out is between the 25th through the 27th of March.
Long term wolfe waves point to a bullish rally around the 27th of March through the first week of April.
Entry at 29.98
Stops at 29.31
Target price at 30.85
To be continued: Over the coming days, this report will be updated with additional details that includes the latest weekly COT report