Silver’s Price Trend Through the Lens of Elliott Wave Analysis. See What We Saw… BEFORE

In March, mainstream analysts didn’t foresee a silver rally. But that doesn’t mean a rally wasn’t coming.

by Nico Isaac
Updated: May 05, 2023

Trigger Warning: This story mentions wiggly, wriggly things of all kinds. Those sensitive to skin-crawling sensations should scroll ahead to paragraph 10.

Last weekend I took an entomology course for identifying harmful and beneficial garden bugs titled "Pest or Pal, Know Before You Grow."

I left with more knowledge than I came. Fun fact: Sometimes the only way you can tell a moth from a butterfly is that moths' wings at rest lay flat at their sides while butterfly wings at rest stand above their heads.

That 57% of the human body is composed of bacteria, fungi, and parasitic arachnids creating a teeming microbial biome in your gut, cells and skin -- that fact I could've gone without knowing for the rest of my life.

(Can't put that toothpaste back in the tube, I'm afraid.)

At one point, the instructor showed us a sample of a normal sized mosquito. And then he asked us to look under a microscope at an invisible dot on a slide. When I zoomed onto the lens, there was a bug that looked exactly like an archetypical mosquito.

As it turns out, many insects have microscopic doppelgangers. They're all out there, flying around, laying eggs, pollinating plants and in some cases carrying life-threatening crop diseases.

After going home, taking two hot showers and laundering all my linens and rugs -- I got to thinking about the visible world of market forecasting. Here, mainstream analysis detects "fundamental" events outside a market's backdrop as the catalysts for price moves. This list is extensive, no doubt -- from weather patterns to political elections, earnings data to employment figures.

But do these events pollinate directional changes?

No! The Elliott Wave Principle proves there's another force invisible to the naked mainstream eye that accounts for the majority of trend changes: namely, the collective psychology of investors, which unfolds as measurable patterns directly on price charts.

Take for example the recent performance in silver. This March, the "growing conditions" for silver looked altogether bearish, as Federal Reserve Chairman Jerome Powell doubled down on his commitment to keep raising interest rates to stave off inflation in a March testimony on Capitol Hill.

Silver prices were already sitting at multi-month lows after a brutal decline.

And, according to the master market "gardeners," the hawkish Fed policies would take the bloom off silver's bullish rose. Here, these news items from early March set the scene:

• "Gold, Silver Punished by Still Hawkish Powell" March. 7 Kitco
• "Silver Sinks 20 Dollars After Hawkish Tone"
• "Silver Hammered as Powell Flags Risks of Higher Peak Rates"

From Yahoo on March 17:

"The Fed boss now thinks that they will have to go further and faster on rate rises, potentially moving away from the sedate 25 basis points pace of the last meeting.

"Powell "sounded more hawkish than some had envisaged. Fears over a potential hard landing were revived given the monetary policy transmission lag."

"Precious and base metals slumped, with silver down 4.7% to $20.07 per ounce

"There is room for those expectations to firm if economic strength continues, so gold and silver will remain in a vulnerable place for now."

Under the "fundamental" lens, precious metals including silver would remain vulnerable.

But from an Elliott wave perspective, a budding bullish opportunity awaited silver.

Here, on March 3, our Metals Pro Service published a video update on silver's near-term trend. There, we identified a complete, wave 2 decline, paving the way for a third wave rally. From Metals Pro Service:

"I want to be bullish above the 6.18 retracement level and assume that wave 3 is in progress, that we've seen an important bottom at 20.50.

"I'm hoping that this sharp fall is simply an expression of silver's notorious volatility, and that the strength will return, and we will see prices move up meaningfully. So we could be near the beginning of a very significant advance. Ideally, I want to see prices progress in five waves, above 22 before I can say with some confidence that wave 3 is underway."

And, this next chart of silver shows what followed. The white metal turned red hot in a powerful rally to 1-year highs on May 3.

Of course, trading carries risks, and highly volatile markets like silver are some of the riskiest ones out there. And not all Elliott wave interpretations of price action turn out to be correct.

That said, if you want an objective model for analyzing the near-, and long-term directional potential of the markets you follow, all the while identifying critical price levels to help manage risk, then Metals Pro Service may be the right choice for you.