Today I'm talking with EWI's Metals Specialty Service editor Mike Drakulich about where the next near-term opportunity could arise.
Question: If the world of metals was a vegetable garden, which market's price action is fully ripened on its vine and ready for picking?
Mike Drakulich: That's easy. I am on very high alert in silver.
Q: What is the dominant Elliott wave structure you see underway in silver's recent price action? And what time frame has this pattern developed in?
MD: In the latest Metals Specialty Service intraday chart of silver (posted on Jul 25 at 1:04PM ET / 5:04PM GMT -- Ed.) I label a classic "double zigzag" Elliott wave pattern underway from the mid-May low of 32.30. For those new to our pages, a single zigzag is a 3-wave pattern labeled A-B-C.
Occasionally, zigzags will occur twice in succession, like we see in silver now. In these cases, each succession is separated by an intervening "X," producing what is called a double zigzag.
Q: What in the double zigzag's recent action caused you to raise the urgency of your silver outlook?
MD: Today (Monday, July 25) the zigzag achieved a classic 50% retracement of the previous Elliott wave pattern of one larger degree.
Q: Are there any technical indicators with readings that bolster your outlook for silver's next big move?
MD: Yes, indeed. The Relative Strength Index (RSI) is diverging against the daily and other nearer term time frames.
Q: What is a divergence?
Mike D: When prices go to a new high or low but internal technical measures (RSI, or momentum) of the "strength" of the move register weaker readings.
Q: What will be the final cue that silver prices are in fact on course to confirm your wave count?
Mike D: At this time, there are a few "key" levels that would increase the probability of the kind of outcome I expect. I identify those areas in the latest Metals Specialty Service forecasts.