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May 2, 2016 | Birth of New Bull Market in Silver Bullion

Joe Russo is the Publisher and Chief Market analyst for Elliott Wave Technology, and has been practicing Elliott Wave Theory and Technical Analysis of Financial Markets since 1991.

The prospect for the birth of a new Bull-Run in Silver speaks to a broader cyclical theme that relates to a dying dollar bull, and a corollary cyclical sentiment shift back toward a strong market preference for tangible vs. paper assets. From its current cyclical low in December of 2015, Silver Bullion has risen 30%.

In the broadest of terms, the above referenced theme would suggest the early adoption of a general pair’s trade that was short the dollar and long commodities.

At present, from an Elliott Wave perspective, the 30% rally in Silver is somewhat tentative in terms of whether or not its wave structure is exhibiting impulsive (bullish) or corrective (bearish) patterns.

New Silver Bull

From its cyclical low at $13.63, the 1st wave move up to $15.99 appears impulsive.  The sideways expanded flat/running correction to the noted wave-2 low at $14.78 was clearly corrective in nature, which led to a rather impressive run to the current print high just under $18.00.

The latest move up is clearly impulsive however; price needs to run higher in amplitude toward the $18.60 level or better yet, toward the rising blue upper trend channel boundary in order to satisfy the appearance of a sufficient 3rd wave advance.

As an aside, amid the course of the sideways correction toward wave-2 down, two upside targets were identified and captured at $16.98 and $17.73 respectively.

Additional observations of importance surround key resistance noted at $18.50, which is a rather important level that must be pierced in order to negate the three outstanding downside targets listed at $13.30, $13.00, and $11.80.

Key support rests at $15.99, which is the crest of the first wave up.  A breach of this level upon an anticipated 4th wave decline would violate the makings of a longer-term bullish impulse.  Should such a breach occur, it is far less bullish but still possible that another sub-dividing 1st and 2nd waves may correctively develop.

Although the daily price action is overbought and due for a pullback, a new momentum high has confirmed Friday’s close, and suggests higher highs in the offing prior to the next pullback.

The general guidelines and parameters outlined above should over the near-term, greatly assist all those interested in following the future success or failure of Silver Bullions attempt at giving birth to a new bull market.

Until another item of interest tweaks our interest:

Trade Better / Invest Smarter

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May 2nd, 2016

Posted In: Elliott Wave Technology

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