|Figure 1 shows silver breaking through and invalidating the perfect triangle that many traders and analysts have been following, but which I had been expecting. The first hint was that wave (a) looked like a five-wave advance. In contracting triangles, the five waves within it must be composed of three wave structures. Now, both my waves (a) and (c) are five-wave structures, as I would want them to form the circled b wave.|
My indicator shows resistance at this price area and, as Elliott wave theory traders take notice, I would expect to see silver turn and drop. When the (c) wave high is established, silver will fall to either a new low under 1000 or somewhere above it if it follows our preferred larger triangle pattern.
|However the pattern unfolds there's a silver lining at the end of either forecast, and silver should explode from these levels. There's no indication that the market is ready to turn down yet and, as a matter of fact, it still looks like it could go higher. But once it does reverse, there is a nice short trade available.|
|FIGURE 1: SILVER. The move above the red trendline invalidates the triangle.|
|Graphic provided by: eSignal.|
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