July Silver peaked at $18.89 on May 3rd, one day after the projected reversal swing date. The following day, Silver began a sharp two-day decline that dropped the price from $18.85 to $17.08. The price decline stopped inside the 60% buy window (based off the price swing from March 25 to April 12), but more importantly, Silver has plunged into a second reversal swing date. (Typically, when there are two reversal swing dates close together, the second date is the dominate swing date.) The market paused for one day, after trading into the May 5th reversal date, before turning higher and surging over $2.65 during the next four trading sessions. The low pivot posted on the May 5th reversal swing date marked the end of an ABC continuation pattern that falls in the center of a longer-term reaction cycle.
Currently, the Silver is approaching the upper reaction line and is overdue for a much needed corrective pullback. The corrective pullback is needed to form the next reaction swing in the cycle progression and mark the beginning of the next bullish cycle. Even though the market is overbought at this time the momentum could push Silver over $20.00 before the correction begins.
The Silver market has been very volatile lately, which in turn brings high risk as well as the potential for a high return for traders willing to take the risk. However, the foreknowledge of where and when the market may turn can help control the risk and give the astute trader a heads up to trading opportunities.
