Silver has broken below major support of $24.00 yesterday. The metal has registered a fresh low around $23.78 before finding interim support. It remains to be seen of bulls are back to produce a meaningful counter-trend rally from here.
Silver had dropped through $11.60 levels in March 2020 and since then has remained in control of bulls until $30.10/20 highs registered on February 01, 2021. The metal had carved an impulse wave between $11.60 and $30.10, clearly subdividing into 5 waves.
If the above impulse wave terminated at $30.10 levels, Silver might be underway to unfold a corrective wave at least towards $18.50/19.00 levels, going forward. Looking at the wave structure since $30.10 highs, the metal seems to have carved a 5 wave drop towards $23.78 levels.
The drop is not an impulse but can be classified as a leading diagonal since the drop has unfolded into 5 waves, unfolding as a 5-3-5-3-5 structure. If the above interpretation holds well, Silver might be preparing for a corrective Wave 2 rally towards $27.50 mark.
Also note that Fibonacci 0.618 retracement of the drop between $30.10 and $23.78 is passing through $27.65 levels, alongside the backside of the support turned resistance trend line. If prices manage to reach there, Silver is expected to face strong resistance.
Alternately, if bears continue to drag prices lower from here, Silver might be unfolding into a Wave 3 lower towards $19.00 levels at least. Either way, the metal remains bearish, and selling on rallies is a safe trading strategy.
Finacademy Technical Team
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