Silver's Wild Ride: Doubled, Crashed, Now What?

Silver futures have recently undergone a period of extreme volatility, surprising traders worldwide. The metal experienced a parabolic surge, doubling its value from approximately Rs 1.4 lacs to Rs 2.8 lacs on the MCX. This dramatic rise was attributed to widespread reports of global silver shortages and dwindling storage supplies.

However, this sharp ascent was swiftly followed by a significant correction. Within a mere three sessions, silver prices plummeted by approximately 46% from their recent highs. This rapid decline led to the unwinding of many positions, and the metal has since been in a corrective phase characterized by consolidation.

Analysts observe this corrective leg as a potential five-wave Elliot triangle pattern. The current consolidation around Rs 2.4 lacs aligns with a 62% retracement of the previous advance. Despite this correction, the time elapsed for this move is considered relatively short, suggesting the possibility of a more extended WXY pattern.

Looking ahead, the immediate rally might face resistance between Rs 3 to Rs 3.25 lacs before potentially facing another retracement. The overall outlook indicates that the frenetic price movements may be concluding, with silver futures likely entering a period of range-bound trading for several weeks. While significant downside is not anticipated, substantial upward gains also appear unlikely in the near term.