Silver advances over 3.14% this week, increasing its gains by the sixth week in a row. The precious metal could visit the $20 per ounce, the highest level since September 2016.
The Market Sentiment
Silver, in its weekly chart, reveals that institutional participants hold a bullish sentiment. The speculative positioning identified in green, taken from the Commitment of Traders report (CoT) issued each Friday by the CFTC, confirms that institutional traders hold its long positions expecting new higher highs. At the same time, both the COT report as the price action doesn’t reveal signals of a reversal trend.
On the other hand, the strong upward momentum that can be seen on the precious metal is driving it near its 52-week high located at $19.65 per ounce. This market context leads us to expect an increment in volatility on the metal sector, which could hit new highs.
The following daily chart reveals that Silver volume remains above the 250 trading sessions average. The relatively high volume level along with its price advancement confirms that the current uptrend remains intact.
The Elliott Wave Outlook
The Elliott wave perspective sketched in the following 12-hour chart exposes an incomplete bullish five-wave sequence, which could drive prices to exceed the $20 per ounce.
The precious metal started an incomplete bullish sequence last March 18th when the price found fresh buyers at $11.64 per ounce. Once Silver started its recovery, the market participants sent it into an internal five-wave rally to $15.84 per ounce, where it completed wave ((a)) of Minute degree labeled in black.
In the previous chart, we observe a narrow-range corrective sequence developed into a three-wave structural series that failed to achieve a new lower low. This market context warns us about the potential strong upward momentum that could drive Silver toward new higher highs. In fact, the price action reveals an incomplete fifth wave of Minuette degree labeled in blue, which remains in progress.
The RSI oscillator reveals a bearish divergence, which leads us to confirm that Silver currently moves in its fifth wave, possibly belonging to a wave ((c)) of Minute degree. In an alternative count sequence, Silver could be advancing in a wave ((3)) of Minute degree.
Considering the Elliott Wave rule of extensions, the current fifth wave could be the extended wave of the entire upward sequence. On the other hand, the Fibonacci projection suggests that the precious metal could extend its gains in a range from $20.04 to $21.66 per ounce.
Finally, as long as the price action continues advancing above the $18.47, the short-term trend will continue being led by the bull traders.
