Silver’s Short-Term Bull Flag

May 22, 2023

Christopher Aaron, Technical analyst, inks at Silver Phoenix, the silver price chart is as constructive as we could ask for in expectation of a rapid price appreciation starting in late-2023 and lasting through 2025. Upon a triggering of the current trading pattern, silver will target a price zone of $44 – $50 per ounce. Investors should use any price weakness over the coming months in either silver or high-quality silver miners to prepare for a rapid price appreciation starting later this year.

Silver’s short-term trading pattern is known as a bull flag, so named for its resemblance to a flag on a flagpole. Bull flag patterns are bullish continuation patterns. The flag or downward-sloping consolidation forms as a counter-trend to the prior impulsive movement. In the case of silver, the original impulsive move was higher as silver advanced from $11 to $30 between March and August of 2020, following the worldwide panic during the onset of the Coronavirus pandemic.

Since early-2021, silver has been in the downward-sloping pause or “flag” portion of the bull flag pattern. During this time, we have witnessed overlapping waves of buying and selling, yet as a net sum silver has declined by $7.70 or 25.3% from the 2021 peak.

Trading now in early February at $22.30 per ounce, silver is the same price that it was 2.5 years ago. However, sentiment in the silver sector is substantially lower than it was when silver first hit $22.30 during the summer of 2020. At the time, silver investors felt euphoria and jubilation as prices rose; today, impatience and despair have taken over in the precious metals sector. This, despite the price being exactly the same.

The deterioration in silver sentiment amidst an overall sideways price movement is a necessary prerequisite to silver’s next impulsive advance. Markets like to take the least number of participants possible with them on waves higher, and by a process of repeating overlapping price waves over the last 2.5 years, silver has convinced many former bullish investors to abandon the sector. Many have thus sold in frustration.

It is precisely because so many have already sold amidst overall sideways price action, that few sellers remain in the silver sector. Silver has been transferred from weak hands to strong hands. And thus, when the next fundamental trigger appears, there will be few sellers left to contrast the wave of buying that will emerge.

Such sets the stage for the next impulsive advance: according to the textbook example, the continuation following the breakout from the flag.

You May Also Like