Silver, or XAGUSD, had a heck of a run between March and August.
The metal went from a low of $11.62 on March 18th to $29.84 on August 7th.
However, since peaking in early August, XAGUSD has experienced a significant pullback.
Or has it?
Although the retracement on the daily time frame (second chart below) looks aggressive, it isn’t.
The 50% retracement of that March to August rally lies at $20.70, which hasn’t been tested yet.
Of course, there’s still time for that.
But the bigger story, in my opinion, is the way silver is holding above multi-year levels and also carving a massive bull flag pattern.
First, let’s look at the multi-year levels for XAGUSD.
Notice how silver broke out earlier this year and is holding above the $20 to $21 area, which is also the 50% retracement of the year-to-date range.
Looking at the daily time frame, it appears XAGUSD is carving a huge bull flag pattern off of the August high.
If the recent low in August holds, the measured objective is near $39.
The bottom line is that there may be more consolidation ahead for silver, but the long term outlook remains bullish.