The tension in the silver market continues to rise. It will reach a climax very soon. This article explains why.
Very recently both the silver price and miners broke down. We wrote Silver Price Crashing. What’s Next For Silver In 2017 as well as Silver Miners Starting To Break Down, Bearish For Precious Metals.
Silver miners have been acting as a leading indicator for the precious metals segment. InvestingHaven’s research has identified SIL (silver miners ETF) as an incredibly accurate chart which shows a pattern representative for gold, silver and miners. See the chart and the ‘pixel perfect’ triangle pattern below.
Two weeks ago silver miners broke down from that pattern. That was the official start of a break down. It suggests that the short AND medium term trends are down. That is huge news, make no mistake, even if others are not talking about it. We are confident that our viewpoint is very accurate and meaningful for investors.
What’s the whole point in coming back to this if the breakdown already occurred? The point is that a breakdown (similar to a breakout) tends to come back and test the breakdown (or breakout) level. And that is exactly what is happening right now, see our purple annotation on the chart.
Two things can happen from here:
- The most likely path which we give an 80% probability is that SIL heads lower from here. If that happens investors will know for sure that the breakdown is confirmed.
- However, if SIL continues to rise to at least $34, or even break above $35, it would suggest that the breakdown of last week is invalidated.
Never say never when it comes to markets. We never stick with a 100% certainty to any of our forecasts, we simply estimate the probabilities. There is always a bullish case and a bearish case to be made and to be taken into account.
The reason we believe that the bearish scenario has a higher probability is based on seasonality. As explained in great detail in the Silver Price Seasonality Chart which was picked up and featured as a MarketWatch Silver Price Prediction. We will soon find out whether our bearish Silver Price Forecast For 2017 will be unfolding or not.
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