Is the Silver Correction Over?

The silver 2hr chart below suggests a strong statistical probability that silver bottomed on Tuesday/Wednesday. Note the following:

• Silver has retraced Fibonacci 62% (purple line) of the recent short-term run-up
• Price has broken out of a wedge pattern to the upside – breakouts from wedge patterns are statistically quite reliable indicators
• Price bounced convincingly off the short-term support line (blue)

But also note: the indicators (below) suggest that the “recovery” is heading into overbought territory – perhaps reflecting the velocity of the bounce – but this is not particularly significant for forecasting purposes.

Like you, I increased some of my silver holdings on the strength of these probabilities.

Note also that some silver stocks came back to fill their earlier gaps up – also a good sign. FR is a good example.

Gold has also just broken out of its wedge pattern – but there is yet less statistically significant information to confirm a solid “breakout.” (more)