Egoldfx Trendstrength meter worked perfectly last month as mentionned in our last article saying that silver was really taking a beating. Now that silver in USD has lost over 12% in less than a month and seems to be taking a rest, what could happen?
As always we have to turn to the egoldfx Trendstrength meter in order to find some clues...
1. Point 1 shows the beginning of the downtrend that started on 04/18/2017 when both strength lines crossed after bouncing on the bounce levels 3 and 7.
2. Points 2 shows that silver by falling below the bounce line 3 is very weak. This indicates that the downtrend might pause or even stop. As we can see on the XAG/USD daily chart, it matches exactly when silver free fall started to slow down.
3. Point 3 is today and silver strength line managed to cross above the USD strength line but at the same time went directly above the bounce line 7, which indicates that silver has reached its maximum strength and should start to bounce back and weaken again in the days to come. We will need to wait today's daily close to see if silver strength line remains above the USD strength line so that a strong retracement might be in effect or if it moves back below the USD strength line to continue its downtrend.