It's been a deep correction for silver (SI), following the rally that kicked off 2016. At the start of 2016 the March contract hit a low of 13.62. The July contract then rallied above 21. Now, at the end of 2016, the March contract recently traded as low as 15.675. That is a bit more than a 70% retracement of the prior advance (based on the continuous chart). From a long-term perspective it is still a retracement (not a reversal), with the expectation that the price will move back above 21 before dropping below 14.
Figure 1. Continuous Daily Silver Chart
Each wave lower has been formed by a drop, a consolidation (sideways movement for several days), a pop higher, and then another drop. If this is just a retracement, then one of those pops higher will eventually keep going, and the pullback that follows will make a higher swing low (above 15.675). As of Jan. 4, the price is popping following a sideways consolidation.
Short-term this pop higher (pattern) has been a sign of stregnth, as these moves to the upside typically last at least several trading sessions. The bigger money comes into play if the price keeps moving higher, ending the current retracement. Then, entering a long trade between 16.30 and 16.40--with a stop loss below 15.675--presents several dollars of upside for an attractive risk/reward ratio trade.
For those who are bearish, the alternative is to let the price pop higher. IF it consolidates below $17, enter a short trade when the price drops below the low of the consolidation. That would warn that another move to the downside--likely to the $15.50 to $15.30 region--is forthcoming.