Last week expected the correction for Silver to end in four daily candlesticks at the most, at 15.069 – 15.063.
The correction may have ended in three days at 14.607.
Summary: The trend for Silver should still be up. A correction against the trend may have ended two days ago. However, volume continues to be a concern this week because it indicates a possible downwards breakout and does not support the view that the correction has ended.
New updates to this analysis are in bold.
WEEKLY WAVE COUNT
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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 subdivided 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 most likely structure which would be able to meet the minimum price requirement at 23.945 is a zigzag.
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.
DAILY WAVE COUNT
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If there has been a trend change at super cycle degree, then a clear five wave structure upwards must develop. This would still be incomplete.
At this stage, due to the duration, this sideways consolidation looks like it may need to be labelled one degree higher. For now it makes no difference to the expected direction of price, so I will leave it as is. Silver just does not always have nice proportions; I will let Gold lead the way.
The correction may now be a complete zigzag. Within the zigzag, there is no Fibonacci ratio between minuette waves (a) and (c).
Downwards movement did not find support at the cyan line on last week’s daily chart. The line is redrawn. This is currently where price is finding some support.
If the correction continues any lower, it may not move into minute wave i price territory below 14.191.
At 16.802 minute wave v would reach equality in length with minute wave iii. If this target is wrong, it may be too high. When there is some structure within minute wave v to analyse, then the target may be calculated at a second wave degree. At that stage, it may widen to a zone or it may change.
TECHNICAL ANALYSIS
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
During this sideways consolidation, it is now four downwards days which have clearly stronger volume. This indicates a downwards breakout is more likely than upwards. However, in looking back over the last years price action volume is not a reliable indicator of breakout direction for Silver. It sometimes works, but almost as often it does not. In this case, because the volume is for four days and is very strong, it should be taken notice of. This does not support the Elliott wave count. Caution is advised with any long positions. Manage risk carefully.
The last three days has extremely low volume, which is strange. The rise in price from the last low is not at all supported by volume, so is highly suspicious.
On Balance Volume broke below the pink trend line indicating price should break out downwards. However, thereafter OBV is flat and sitting on the new yellow line. This line is almost horizontal, repeatedly tested, and offers strong technical significance. If OBV moves up from here, that would be a bullish signal. If OBV breaks below the yellow line, it would be a strong bearish signal.
ADX is flat indicating no clear trend. The +DX line remains above the -DX line, so if the trend returns it should be up. Price continued lower to find support at the red horizontal trend line. Stochastics is oversold at the same time. Some upwards movement would be expected from here until price finds resistance and Stochastics reaches overbought.
This correction has returned RSI from overbought. There is room for the market to rise or fall.
This analysis is published @ 09:11 p.m. EST.