14 Jan 2021 ● 07:19 AM
Silver MC X prices are still above the low that they made on 11 January at 63,600. So I usually start with the presumption that after an ABC decline wave 2 was probably complete. I'm mentioning this because someone asked me when can I be sure that wave 3 started. The word sure can be equal to a long period of time. The idea of knowing wave theory is to be able to identify that the previous rally was an impulse and therefore should be followed by another impulse. 2nd that a 3 wave correction in between should provide us with a good entry point and risk-reward for the next move. This after a 3 wave correction it's about taking the risk and knowing how to manage risk. If I wanted to be a hundred percent certain I would 1st wait for a move to go back above the low of wave a in the ABC correction which is right now at 68,580. This would lead to an overlap and confirm that the fall cannot be a 5 wave decline later on. But what of the rise is an X wave of an even deeper correction? To be sure it is not I would require prices to go above the wave 1 high of 71550. Of 71,550. Eventually, you will want to rule out wave b of an expanded flat up to 74735. In other words, till we cross 74735 on a closing basis we cannot be sure that wave 3 started. But by then your risk-reward ratio also gets skewed. So learning to manage risk is better than waiting for 100% sure.