Last week’s Silver analysis expected a sideways correction to continue.
Sideways movement for the week fits the overall idea that price is in a correction.
Summary: The correction is still not over. More sideways movement for a few more days is expected for Silver. Volume suggests price should break out downwards.
New updates to this analysis are in bold.
MAIN WAVE COUNT
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Primary wave 4 may be complete and primary wave 5 may be underway.
Primary waves 2 and 4 exhibit perfect alternation and good proportion: primary wave 2 was a deep zigzag lasting 15 weeks and primary wave 4 was a shallow combination lasting 24 weeks, 1.618 the duration of primary wave 2.
At 11.02 primary wave 5 would reach 0.382 the length of primary wave 1.
This wave count is preferred primarily for the reason that there has been no technical confirmation of a trend change from bear to bull for Silver.
Intermediate wave (2) may not move beyond the start of intermediate wave (1) above 17.71. A breach of this invalidation point would now also require a strong breach of the bear market channel, so this invalidation point should not be moved any higher. When that channel is breached that should indicate a trend change for Silver from bear to bull. At that stage, only bullish wave counts should be seriously considered.
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All wave counts at the daily chart level this week will show movement since the high at 16.349 on 28th October.
Choppy overlapping sideways movement fits the wave count. A second wave correction looks to most likely be incomplete for minor wave 2.
At this stage, minor wave 2 may be an expanded flat or it may be a combination. Either way, the structure is incomplete.
If it is a combination, then after minute wave y completes as a zigzag or flat then the breakout should be downwards from the correction.
If minor wave 2 is a combination (or double flat; they are the same kind of sideways structure), then the second structure in the double, minute wave y, should end about the same level as the first structure at 14.632.
Volume favours this wave count. This suggests a downwards breakout should occur because so far during the consolidation the strongest day is a downwards day.
ALTERNATE WAVE COUNT
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This alternate wave count is new this week. For Silver, it looks at the same new idea presented for Gold today.
This alternate resolves the problems last week’s alternate had with rule violations for an ending diagonal. That wave count will not be published again.
If super cycle wave (a) is a double zigzag, then within the second zigzag of the double labelled cycle wave y the structure may be complete.
Primary wave C is an ending contracting diagonal within the zigzag of cycle wave y. All subwaves subdivide as zigzags. The third wave is shorter than the first, the fifth wave is shorter than the third, and the fourth wave is shorter than the second. The trend lines converge.
There is a small overshoot of the (1)-(3) trend line at the end. This indicates the contracting diagonal structure is very likely to be complete.
If this wave count is correct, then super cycle wave (a) has subdivide as a three wave structure. That indicates Grand Super Cycle wave II may be a flat correction.
If this correction at Grand Super Cycle is a second wave (as opposed to a fourth wave), then a triangle may be eliminated.
A combination may also be eliminated because the first wave is a multiple. Combinations may only consist of a maximum of three corrective structures, so within each of W, Y and Z they may only subdivide into simple A-B-C structures (or A-B-C-D-E in the case of triangles). To label multiples within multiples increases the maximum beyond three, violating the rule.
Super Cycle wave (b) must retrace a minimum 90% of super cycle wave (a) at 23.945. Super cycle wave (b) may make a new price extreme beyond that seen for super cycle wave (a) above 49.752 as in an expanded flat.
Super cycle wave (b) may be any one of 23 possible corrective structures. It is impossible to predict at this early stage which one it will be, only to say it is unlikely to be a rare structure such as a running flat, expanding triangle or triple combination. That still leaves multiple structural possibilities.
The first movement up for a wave of this large degree must subdivide as a clear five at the daily chart level, and probably at the weekly chart level also.
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If there has been a trend change at super cycle degree, then a clear five wave structure upwards must develop.
The ending contracting diagonal for primary wave C would very likely be complete as there is a slight overshoot of the (1)-(3) trend line.
So far only a first wave would be complete. Minor wave 2 may be unfolding as a very deep flat correction. It may also morph into a combination.
Minor wave 2 may not move beyond the start of minor wave 1 below 13.569.
Click chart to enlarge.
If the diagonal is not complete, then a final C wave down may be required. However, with the overshoot of the (1)-(3) trend line this wave count looks wrong. Price has returned above the trend line and is perfectly finding support there. This suggests the diagonal is complete.
Sideways movement fits neatly as a running contracting triangle. This may be a B wave.
The diagonal is contracting, so intermediate wave (5) may not be longer than equality in length with intermediate wave (3). The limit for this wave count is at 11.867. Intermediate wave (5) should end a fair way above this point for the diagonal to have the right look.
I do not have confidence in this wave count. It is presented as a “what if?” to consider all possibilities.
TECHNICAL ANALYSIS
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Strongest volume was during an upwards day during this consolidation. This suggests the breakout should be upwards.
ADX is below 15. The market is consolidating.
Price should be expected to swing from resistance to support and back again. Each swing may end when price finds resistance or support and Stochastics is overbought or oversold at the same time. As Stochastics has just reached oversold and price found support, an upwards swing may be expected to continue until price finds resistance and Stochastics reaches overbought.
On Balance Volume may lead the way. A break out of the two trend lines drawn may indicate the price direction for the breakout.
This analysis is published @ 02:38 a.m. EST on 14th January, 2016.
Good to see that there is an ending diagonal count for both gold and silver that meets all the rules.
Yes. Finally.
Although I am still bemused as to why EWI are publishing one that doesn’t.