At 18:22 GMT, XAGUSD is trading $76.27, down $39.30 or -34%.

Professional Traders Wait for Momentum Shift, Not Trendlines

Given the tremendous downside momentum, all we can do is treat this trend line as a target. We have to wait patiently while it’s being tested because momentum selling can and will take it out. However, there is always the chance of recovery. What we could see if you watch closely is how professionals trade versus non-professionals.

The non-professional will place orders to buy on the trend line, but the professional will let the market test or go through the trendline then start taking out offers if and when it turns higher. This is the point where the non-professional complains that they were going after his stop. However, this is not the case. The difference is the non-professional placed an order thinking it would stop the decline, but the professional is thinking, let it go until it stops then catch the intraday reversal when the selling is over. In my world, if I want to be long, I take offers, I don’t bid because I’m not big enough to stop the market.

50% Retracement at $83.61 Defines Key Value Zone

With the selling obvious and the market down more than half of its January rally, we may finally get to see what the market perceives as real value. We know that 50% of the rally from $45.55 to $121.67 is $83.61 so that’s a great place to start. We see that the low of the day at 18:09 GMT is $83.06. Since you may have missed the bottom at $45.55 and you may not have wanted it at $121.67, the 50% price at $83.61 may look attractive if you are looking for the bull market to continue over the long-run.

The Fibonacci 61.8% retracement level is $74.63. This may even be a better price to resume the rally since it forms a cluster with the 50-day moving average at $74.55.

Key Decision: Buy at 50% Level or Wait for Deeper Pullback?

So going into the close and the weekend, we’ll have to decide if the 50% level at $83.61 is our value or if we should wait for another clean break into $74.63 to $74.55.