The Elliott Wave Principle is market forecasting method based on pattern recognition. The main idea is that prices move in repetitive patterns, visible on a price chart, which make the market, to a degree, predictable. Now, let’s examine the 4-hour chart of Silver or (XAGUSD), in order to see if we could find a pattern, which could give us a hint about the Market’s intentions.
Silver has been unable to find direction, wandering between 14.63 and 13.63 for more than a month now. In addition, the range seems to be getting narrower as time progresses.
The pattern, which fits this description, is the triangle. It appears in conventional technical analysis as well, but the Wave principle provides some important details. One of them is the fact that triangles precede the last wave of the larger sequence. If we take the above-shown chart for example, the larger sequence seems to be an A-B-C zig-zag, where wave B is a triangle and wave C is still unfolding. If this is the correct count, the price of silver could fall to new multi-year lows near 13.00. However, this should not be considered as a sell signal, because once wave C is over, a bullish reversal should occur.