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Silver price making retracement; chart shows nice symmetry for rally

Silver price rally in August reverses 8-month fall; proposition for new trend

Silver price is looking very optimistic with very nice symmety on its chart. Before I go there, lets look at its price action in the past year.

  1. Silver price fell consecutively for 8 months based on new monthly lows since November 2012.
  2. In July 2013, it moved sideways. On hindsight, this is basis for its August rally but a sideways movement should always be taken as consolidation for a continuation of its 8-month fall.
  3. August price rally was very strong. Its achievement: erasing May and June losses.
silver possible reversal

September fall due to profit taking


What silver price is doing now

Silver bulls may be disappointed and confused with its current price fall. Is the rally over? So short lived? Is it a reversal or a fluke?

Lets put aside our feelings and consider.

Until price falls below August low thereby erasing gains made last month, the current move is a correction – retracement only.

After such a rally in August, it is natural for short term winners to take profit. With any hint of weakness, sellers take over. Until silver price corrects enough, strong hands wait on the side.

Only if price falls beyond August low will the technical picture change.


Scenarios for Silver price

Silver bullish

We should not anticipate price action but the current symmetry leads me to wonder if an inverted head and shoulders chart pattern might show up. This is possible if price can find support at July high (take it as a zone extending to the April low period.) An inverted head and shoulders is a classic bullish reversal chart pattern that shows a low-lower low-higher low sequence. Here is a picture of an inverted head and shoulders pattern that GBPJPY printed previously. Note the nice symmetry.


Silver bearish

If price fails August low before end of September, sentiment turns ugly.

If price falls below 18.20, then no reversal. Silver enters new 52-week low from this point on.

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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7 thoughts on “Silver price making retracement; chart shows nice symmetry for rally”

  1. Daniel Ku Guet Liang says:

    1 question: Aug may have closed above May close but it is still below the May open. In such case, do we still consider Aug having erase May loss? My initial thought is that the Aug close has to be above May box high to consider so. Hope you can clarify my understanding. Thank you in advance.

    1. Soh Tiong Hum says:

      Does not matter. Fact #1 August buck losing trend. Fact #2 Level we are chiefly concerned about is August low which if broken paints total reversal of August move. Comparing to May is a reference of the August strength. Attempting to interpret too much will immobilise you. We just want to buy low sell high.

      1. Daniel Ku Guet Liang says:

        Grandmaster, you are spot on. Too bad I didnt get to ride this big surge. Price just stop below pt 2 of the long setup in H4. I suppose the bullishness is still intact & now we ‘ve to watch for retracement in LTF to Long?

  2. Daniel Ku Guet Liang says:

    Would this combination of ‘double bottom & Inverted Head & Shoulder’ @ 2008 year high be considered a good signal to consider looking to long?

  3. Soh Tiong Hum says:

    In my opinion it is. We could wait for another signal like a big double bottom – but it could come or not at all. If you are trading, this pattern following the August up flow is good. If you are investing, you may want to average the position.

    1. Daniel Ku Guet Liang says:

      Thank you! =D

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