Disclaimer: This analysis is for educational and informational purposes only. It is not financial advice. Trading in financial markets involves significant risk, and you should consult with a qualified financial advisor before making any investment decisions.
Executive Summary & 1-Week Prediction
The daily chart of Silver shows a powerful and established uptrend, particularly since the lows in April. The recent price action has been parabolic, culminating in a new high at 116,641. The last candle is a large bearish candle, indicating a sharp pullback or the beginning of a consolidation phase.
Prediction for the Next 1 Week (5 trading days):
The immediate momentum has shifted to the downside due to the strong selling pressure seen in the last candle. For the next week, the most likely scenario is consolidation and further short-term correction.
The price is likely to trade in a range, potentially between 109,000 and 115,000.
It will probably test deeper support levels before buyers regain full control. A dip towards the 110,000 - 109,300 area would be a healthy pullback.
The primary uptrend remains intact as long as the price stays above the major support zones. A breakout above 116,641 would signal a continuation of the strong rally, while a break below 109,000 would suggest a deeper correction.
Detailed Technical Analysis
Here is the breakdown based on various technical theories:
1. Price Patterns & Trendline Analysis
Primary Trend: Strongly Bullish. The chart clearly shows a pattern of higher highs and higher lows.
Price Pattern: The recent sharp rally followed by a pullback could be forming a Bullish Flag pattern. The rally is the "pole," and the current consolidation could form the "flag." This is a continuation pattern, suggesting the uptrend will resume after this pause.
Candlestick Pattern: The last candle is a large red (bearish) candle that follows a series of smaller green candles. This is a Bearish Engulfing or "dark cloud cover" type of pattern, signaling a potential short-term top and a shift in momentum from buyers to sellers.
Trendline: An ascending trendline can be drawn connecting the lows of April, May, and early June. This trendline currently acts as major dynamic support, estimated to be in the 107,000 - 109,000 region. A break below this line would be a significant bearish signal.
2. Support and Resistance Levels
Resistance 1 (Major): 116,641 (The recent all-time high). This is the key level bulls need to break to continue the trend.
Support 1 (Minor): 112,457 (The low of the most recent candle). The price is currently testing this level.
Support 2 (Key): 110,000 - 109,300. This area represents a previous minor swing high and aligns with a key Fibonacci level (see below).
Support 3 (Major): 105,000. This was a significant consolidation area in mid-to-late June.
3. Fibonacci Ratio Analysis
Drawing a Fibonacci Retracement from the start of the recent major impulse wave (late-May low around 97,500) to the recent high (116,641):
23.6% Retracement: ~112,125. The price has already pulled back to this level, which often provides weak, initial support. The recent low of 112,457 is right here.
38.2% Retracement: ~109,320. This is a critical support level. A pullback to this level is common and healthy in a strong uptrend. It aligns perfectly with the "Support 2" zone mentioned above.
50% Retracement: ~107,080. This would represent a more significant correction and aligns with the ascending trendline.
4. Elliott Wave Theory Analysis
A plausible Elliott Wave count for the rally from the April low is:
Wave 1: The move up from the April low to the early May high.
Wave 2: The corrective dip during May.
Wave 3: The very strong, extended rally from the late May low (~97,500) to the recent high of 116,641. This fits the character of a Wave 3, which is typically the longest and strongest.
Wave 4 (Current Phase): We are very likely in a corrective Wave 4. Wave 4s are often complex and tend to retrace to the 38.2% Fibonacci level of Wave 3, which is ~109,320. A key rule is that Wave 4 should not enter the price territory of Wave 1 (i.e., not fall below the Wave 1 peak around 102,500).
Wave 5: After Wave 4 is complete, the theory suggests a final Wave 5 will begin, pushing the price to a new high above 116,641.
5. Moving Average (10 & 30 period) Crossover
Although not plotted, the price action confirms that the 10-day MA is well above the 30-day MA, indicating a strong bullish trend.
The current price is likely pulling back towards the 10-day MA, which will act as the first dynamic support. A close below the 10-day MA would signal weakening momentum.
The 30-day MA would provide a much stronger support level, likely located near the 105,000-107,000 zone.
A bearish crossover is not imminent. The key signal to watch is how the price reacts to touching these moving averages from above.
6. Indicator and Oscillator Analysis (Inferred)
RSI (Relative Strength Index): The sharp rally to 116,641 almost certainly pushed the RSI into overbought territory (above 70). The subsequent price drop is allowing the RSI to cool off from these extreme levels.
Bearish Divergence: It is highly probable that a bearish divergence has formed. This occurs when the price makes a new high (at 116,641), but the oscillator (like RSI or MACD) fails to make a new high. This is a classic sign of weakening momentum and often precedes a correction, which is exactly what we are seeing.
7. Gann Theory, Pivot Points, and Time Cycles
Gann Angles: A 1x1 Gann Angle drawn from the April low would represent the main uptrend support line. As long as the price stays above this angle, the primary trend is considered intact. This angle would currently be tracking around the 107,000-109,000 area, reinforcing its importance as a support zone.
Time Cycle Analysis: The period from the October 2024 high to the March 2025 high, and then the subsequent rally, suggests cyclical turning points. Traders should be aware that after a powerful move in price, a correction in time (i.e., a sideways consolidation) is common.
Pivot Points (Estimated): Based on the recent price action, the monthly/weekly central pivot point is likely far below the current price. For the next trading day, the price is trading below its daily pivot. The key support levels S1 and S2 will be watched closely, likely aligning with the Fibonacci levels mentioned earlier.
Possible Trading Strategy
Given the analysis, the primary strategy should be to buy on dips, as the main trend is bullish. A counter-trend short is extremely risky.
Strategy: Buy on Pullback
Entry: Wait for the correction to find a base. An ideal entry zone is the confluence of support at 109,300 - 110,000. Look for a bullish reversal candle (e.g., a hammer, a doji, or a bullish engulfing pattern) in this zone before entering. An aggressive entry could be taken on a confirmed bounce off the ~112,000 level.
Target 1: 116,641 (retest of the recent high).
Target 2: 120,000 - 122,500 (This would be a potential target for the completion of Elliott Wave 5, based on Fibonacci extensions).
Stop-Loss: A logical stop-loss should be placed below the support structure of your entry. If entering near 110,000, a stop-loss could be placed below the 50% Fibonacci level, for example, at 106,800.
Comments
Post a Comment