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We will study the weekly chart for the metal, starting from the bottom of October 2008 at 8.44 to the top of April 2011. We notice that trading remains above the main ascending trend-line colored in gold; this support will actually be the golden one for 2012.
The aforementioned support resides near 25-24.30 areas, and this area is also an important harmonic level. We can see on the image above that the metal formed a bullish AB=CD harmonic pattern, this pattern is not complete yet and still underdevelopment, the probabilities of completing the pattern depends on the ability of 24.30 to hold. We notice that there is harmony between the classical point of view and the harmonic one, and this harmony points towards 24.30-25.00 level giving the level more importance. This level is the 161.8% Fibonacci extension of the BC leg for the AB=CD pattern, and also the 61.8% for the entire bullish wave that started from 8.44 to 49.83 dollar/ounce.
We should mention before going further with our analysis that the harmonic scenario suggests that 26.90 might be another reversal zone for the harmonic pattern; thus, the pattern might be already complete.
Now, let’s go direct to the point, it’s not unlikely that we see an extension of the downside move within the upcoming period, especially if the pair manages to settle below 29.15, and this level is the 50% Fibonacci level for the entire bullish wave (8.44-49.83), and stability below this area shall lead the extension towards 24.30-25.00.
When reaching those classic and harmonic targets (24.30-25.00); we should follow silver carefully, as the next direction will depend on these levels, breaching it will extend the move at least towards 20.15 and maybe 17.30 and 16.30.
On the other hand, if the AB=CD successfully manages to start a bullish direction, a retest of the 38.2% Fibonacci correction of the same wave at 34.00 is possible, where we might see an attempt to settle above the 52-weeks Simple Moving Average, currently around 35.40. If that level is reached we should monitor price action carefully again as it might be the real key level for resuming the bullish trend that initially targets 40.05 followed by point C at 44.20.
We expect the downside pressure to continue towards the mentioned support area within the coming period. However, we think that this area will successfully halt further decline and a new bullish wave may start. But in any case, we should monitor the sensitive support carefully.
To conclude, 24.30-25.00 to the downside and 35.40 to the upside are the most important levels to watch, failing to breach this area will result in a range-trading period. MACD indicator supports a negative start in 2012. However, Stochastic is approaching oversold territory; thus, indicating that we may see a rebound to the upside soon, so long as 24.30 remains intact.
The aforementioned support resides near 25-24.30 areas, and this area is also an important harmonic level. We can see on the image above that the metal formed a bullish AB=CD harmonic pattern, this pattern is not complete yet and still underdevelopment, the probabilities of completing the pattern depends on the ability of 24.30 to hold. We notice that there is harmony between the classical point of view and the harmonic one, and this harmony points towards 24.30-25.00 level giving the level more importance. This level is the 161.8% Fibonacci extension of the BC leg for the AB=CD pattern, and also the 61.8% for the entire bullish wave that started from 8.44 to 49.83 dollar/ounce.
We should mention before going further with our analysis that the harmonic scenario suggests that 26.90 might be another reversal zone for the harmonic pattern; thus, the pattern might be already complete.
Now, let’s go direct to the point, it’s not unlikely that we see an extension of the downside move within the upcoming period, especially if the pair manages to settle below 29.15, and this level is the 50% Fibonacci level for the entire bullish wave (8.44-49.83), and stability below this area shall lead the extension towards 24.30-25.00.
When reaching those classic and harmonic targets (24.30-25.00); we should follow silver carefully, as the next direction will depend on these levels, breaching it will extend the move at least towards 20.15 and maybe 17.30 and 16.30.
On the other hand, if the AB=CD successfully manages to start a bullish direction, a retest of the 38.2% Fibonacci correction of the same wave at 34.00 is possible, where we might see an attempt to settle above the 52-weeks Simple Moving Average, currently around 35.40. If that level is reached we should monitor price action carefully again as it might be the real key level for resuming the bullish trend that initially targets 40.05 followed by point C at 44.20.
We expect the downside pressure to continue towards the mentioned support area within the coming period. However, we think that this area will successfully halt further decline and a new bullish wave may start. But in any case, we should monitor the sensitive support carefully.
To conclude, 24.30-25.00 to the downside and 35.40 to the upside are the most important levels to watch, failing to breach this area will result in a range-trading period. MACD indicator supports a negative start in 2012. However, Stochastic is approaching oversold territory; thus, indicating that we may see a rebound to the upside soon, so long as 24.30 remains intact.
