In my last few pieces I identified the $105 level as a crucial inflection point for silver using a Fibonacci extension to provide a framework. As is common in environments of extreme optimism price overshot, all be it very briefly to $117. Mean reversion was also discussed, where I suggested that preparation for said event might be a great idea.
The gold to silver ratio has now bounced strongly from the support level I had also identified in prior recent writings. Further volatility is expected (which maybe a chance for participants to adjust positioning), but the probability in my opinion is now that the move to mean reversion in metals is underway.
A Fibonacci retracement plotted on the chart below indicates potential downside targets should the move progress. Failure for bulls to reverse today's liquidation and get back over $105 in very short order, i think increases the probability for further downside greatly.
First target would be 0.382 around 80$, below that the 0.5 level comes into play. This may sound strong - but given the distance between the 200 week moving average and current price - a move to $68 - $70 is a very concrete possibility and should be seen as realistic.
Is this the ultimate top? I am willing to give benefit of doubt that this is not it. We continue however to carefully observe price action for nuances that may help us determine what course of action - what plan - provides optimal flexibility such that we may best attempt to limit downside and maximize upside.
Good luck.
