iShares Silver Trust (SLV)

Question: Saw your note on SLV 10 days ago, what do you think with this drawdown have we reached a top and looking for a more serious correction before next leg up?

Silver came under pressure and corrected this week after a late November into late December melt-up. Similar to Silver futures (Dec 26 Charted Market Insights), the iShares Silver Trust (SLV) exceeded the upside count for its breakout from a mid October into late November cup and handle pattern near 56 and overshot 100% and 161.8% extension targets near 64 and 67, respectively, with the next 161.8% extension projecting SLV to 78.

Chart 1: iShares Silver Trust (SLV): Daily chart

Choppy vs. toppy so far

This week's choppy 4-day decline suggests a corrective phase rather than a top for SLV. The rising 13-day moving average (DMA) at 63.47 (63) provides the initial risk management level. If SLV weakens below the 13-DMA, a deeper retracement of the rally from late October would be perfectly normal and potentially healthy for silver. Under this scenario, we are watching the retracement levels of the late October to late December rally at 59.94 (38.2% retracement), 56.43 (50.0% retracement), and 52.97 (61.8% retracement). The rising 26-DMA at 58.17 sits between the 38.2% and 50.0% retracements, while the rising 40-DMA at 53.83 comes in above the 61.8%. Ideally, SLV holds the upper end (38.2% to 50.0% retracement levels) of these potential supports to increase confidence in a bullish consolidation rather than a top.

Chart 2: iShares Silver Trust (SLV): Daily chart

Big base breakout intact but watch the "real body" for December's candle

SLV's breakout from a 2011-2025 big base remains intact on the monthly chart with upside counts to 83 and 86. We are watching the real body for SLV's December candle. The real body is the area between the opening level and closing level for the period. SLV gapped above December's close at 64.42 to start the new year. If SLV holds above December's close, we would view that as very bullish for silver. However, if any deeper downside volatility holds above the mid point of December's real body at 58.21, it would bode well for a bullish continuation pattern for SLV. The 58.21 level sits between the 38.2% and 50% retracement levels highlighted in Chart 2 above.

If SLV closes January below 58.21 but above 51.99 (December's opening print), then the pattern gets more challenging with the potential for continue choppy trading as SLV struggles for direction.

If January sees a close on SLV below 51.99, it would put in a monthly bearish engulfing pattern, increasing the risk that SLV's big breakout does not hold.

Chart 3: iShares Silver Trust (SLV): Monthly chart