Analyse de marché
Correction of silver prices is nearing completion, analysis by Clive Maund. Clive Maund has shared a fresh perspective on the silver chart. As a result of the recent decline, it has approached the target buying zone, the analyst believes.
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The correction in silver prices is close to ending. It is important to note that there is no fixed minimum target value, but rather a buying zone where the lower the price, the more advantageous the purchase. If silver prices fall below $50, the buying idea becomes even more attractive—the reasons for this become evident when studying the charts.
First, consider the 5-year silver chart for a general overview. Here, we see that after a parabolic rise in late January, the price dropped below a short-term parabolic uptrend, which had become incredibly steep, and then broke through the 200-day moving average, which was also sharply rising. This undermined market sentiment and led to a further drop to a strong support level, which is expected to end the correction and initiate the next major uptrend, eventually driving prices to new highs.
This chart clearly shows that a bullish trend still prevails in the silver market, as indicated by the price being significantly above the long-term parabolic uptrend. It is no coincidence that this parabolic uptrend steadily rises into a powerful support zone, as it forms the upper boundary of a giant 45-year cup-with-handle pattern. This, of course, confirms the significance of the main buying zone. Having broken the support of the 200-day moving average, silver has entered a kind of “no-man’s land” just above strong support. The deeper it sinks into this area, the more attractive it becomes for buying.
The position of the parabolic uptrend clearly indicates that silver may stay in this zone for some time until market sentiment recovers. This will provide time to accumulate silver at favorable levels. Looking at the 1-year chart provides a more detailed view of the correction. This chart shows that silver is steadily declining within a parallel descending channel and is currently in a short-term oversold zone near the channel’s lower boundary, making a rebound possible. However, it has just broken through a narrow but important support level around $62-$63, so this support level has now become resistance for short-term growth. Examining events on the short-term 3-month chart, we see that the sharp drop below the $62 support was followed by a narrow trading range, likely a “bear flag.” If this is the case, it will be followed by another sharp decline into the strong support zone, which should mark the end of the correction after the January peak.
This interpretation is supported by a gap down on higher volume during the decline of the iShares Silver Trust SLV , followed by low volume during a weak subsequent attempt to rise. In summary, the silver correction is coming to an end.
Finally, the long-term silver chart, covering data since 1980, vividly demonstrates why silver has entered a new—and very favorable—phase. This chart shows that in late January, silver broke out of a giant 45-year cup-with-handle pattern; this was accompanied by an unprecedented surge in the MACD indicator, shown at the bottom of the chart. This indicates a powerful breakout of enormous significance.
Most traders currently puzzling over whether silver will fall another $5 or $10 “can’t see the forest for the trees.” This is not crucial if the price rises to several hundred dollars, as it will due to the accelerating process of money creation, as Egon von Greyerz continues to repeat. The current normal reaction after the breakout, with silver returning to the strong support zone, may present an attractive buying opportunity for the asset. Therefore, there is no need to painfully speculate whether the metal will drop a few more dollars.
