Silver Update: This Cup Should Refresh Bulls

Aibek Burabayev - Contributor - Metals

Code Orange

In my previous post I warned bears to be alert to the changing trend as strengthening signals started to appear for Silver. This month I think the proper code for the current bear market is orange. The orange level requires sellers to be prepared for the anticipated worsening of conditions.

Chart 1. Silver Monthly: Second Attempt to Break Up

Monthly Chart of Silver
Chart courtesy of

I added the Fibonacci retracement level on the chart to show you how deep the silver price drop is. The 78.6% is usually the last level of correction, where most buyers have already jumped out of their long positions. The metal stopped falling right above it. For comparison, gold retraced only 50% of the rise and it has some room for further weakness.

There is an area of multiple supports and I described them in my earlier posts: The 2006-2007 former resistance level, AB=CD level and the middle of the falling channel. The Fibonacci retracement level adds to the count and as you can see they had enough power to reverse the price up together.

February has failed as the price lost a decent part of the gains at the end and the month closed below the trendline. This month the price is making a second attempt to break to the upside of the red downtrend. It is a multi-year downtrend and a break of it would lead to the quick reversal of the market. As I mentioned before, the first resistance is located at the peak of October 2015 at $16.34. The next is the area of the 2013-2014 consolidation low at the $18.5 level.

Chart 2. Silver Daily: Bullish Cup And Handle Pattern

Silver Bullish Cup And Handle Pattern
Chart courtesy of

For the first time in my posts, we see this interesting and rare pattern. The Cup and Handle pattern was brought to light by William O'Neil in 1988. As the name implies, this formation resembles the profile of a tea-cup with a handle on the right side as it was highlighted on the chart.

Usually, it is a long-term pattern which sometimes can take 2-4 months to form. It took silver more than 100 days to shape the Cup on the chart above. However, it may occur during a one day period and can also be found on the hourly charts.

Our pattern has already been fully shaped; we have a cup and a handle in place, and by the way, the handle in this pattern is also known as the Bull Flag pattern, which was broken up and now the price is moving back to the break point.

The idea is to buy on the break of the Right Lip of the Cup above $15.93. To calculate the target, we should measure the depth of the cup from the Right Lip to the bottom of the Cup (which is $2.3) and add it to the Right Lip level. The target is located at $18.23 and you can book up to a 14% of the profit on the trade.

The daily chart shows that the chances of a trend reversal are really high once this rare pattern develops. Let us live and see!

Intelligent trades!

Aibek Burabayev Contributor, Metals

Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from for their opinion.

11 thoughts on “Silver Update: This Cup Should Refresh Bulls

  1. Aibek, dont take me wrong but I think you should invest in Bitcoin !
    Many greetings from the virtual digital crypto world.

    1. Dear Shashi,
      Short term bullish move is expected on break up of $15.93 Right Lip level. It's daily chart and the price action should develop soon.
      Best wishes,

  2. Chart patterns are fine, but when the international banks and governments artificially manipulate prices with paper gold and silver the individual investor must deal in the physical metals and not rely on someone else to hold it for him.

  3. silver is for people that have extra money and want to wait for the end of the paper monies. I have been buying silver from 4.00 a ounce up to 20.00 for the last 35 plus years, its been a flat no profit trade .I am buying more at 15.50 .this is my last buy ,If it does not break over the 60.00 level on the next up side move I am going to cash out of my long term holdings and move on.. silver should be 150 .00 or better. At were the gold market value and use of the silver metal for products. it under valued but the end users are selling into the upside on the futures. and taking procession of the spot month when they need the product . they also use the ETFs for hedges . Its a rigged market.

  4. Silver is the most undervalued asset on earth. Silver is five times better
    than gold and will return to it's tradition, historical ratio of about 15
    to 1 rather than 82 to 1. Only silver and gold are real money- everything
    else is paper. All paper will be worth paper. You have to hold silver
    bullion personally. No storage program, no paper silver, no silver
    mining stocks. Got silver?

  5. A very good analysis and nice input to the current situation in Silver. Myself, I was trying to simply figure out if there was a "plain" 1-2-3 bottom in place. Silver (as much as gold) has to sustainably turn around back up sometime, but figuring out when specifically this will be is the hard part. Your view may be very helpful with the not-so-easy task of figuring out just that! Thanks.

    1. Dear Mark,
      Thank you for warm words, I do my best!
      Best wishes!

    2. It would definitely be nice with a turnaround. I once had substantial silver hodings. However, I dumped all of it a while back, when I realised that it doesn't matter whether or nor not all stockpiles have been exhausted. All that matters to the price of silver, is what happens to the price of gold....

      1. Dear John,
        Thank you for feedback!
        Let's live and see!
        Best regards, Aibek

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