Price has broken out of a small consolidation. Both Elliott wave counts remain valid.
Summary: Look for a bounce in the short term, which may end about 17.100. But if the bounce takes price above 17.680, then have confidence in an upwards breakout. The target would be at 20.395.
A new low below 15.525 would indicate an ongoing bear market for Silver. The target would be at 3.858.
Last monthly charts can be viewed here.
New updates to this analysis are in bold.
ELLIOTT WAVE COUNTS
MAIN WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
The main wave count expects that the bear market, which began from the April 2011 high, is incomplete.
Cycle wave a is seen as a five wave impulse for this main wave count. There are multiple corrective structures possible still for cycle wave b.
This first weekly chart sees cycle wave b as a now possibly complete regular contracting triangle.
Primary wave E of the triangle may have ended with an overshoot of the A-C trend line. If this wave count is correct, then price should have reversed already. Within the new downwards trend, no second wave correction may move beyond the start of the first wave above 17.680.
DAILY CHART
Click chart to enlarge.
A five down may now be complete. Minor wave 1 subdivides very well as a leading contracting diagonal on the hourly chart. Minor wave 3 exhibits strong momentum. Minor wave 4 does not overlap minor wave 1 price territory.
A five down may be followed by a three up. Intermediate wave (2) would most likely end about the 0.618 Fibonacci ratio of intermediate wave (1) about 17.100.
A new high by any amount at any time frame above 17.680 would invalidate this wave count for Silver. Intermediate wave (2) may not move beyond the start of intermediate wave (1).
SECOND WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
Cycle wave b may be completing as a double combination: zigzag – X – flat. The second structure, a flat correction for primary wave Y, may be underway.
Within a flat correction, intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 15.938. Intermediate wave (B) has met this minimum requirement; the rule for a flat correction is met. Intermediate wave (B) is longer than 1.05 times the length of intermediate wave (A) indicating this may be an expanded flat. Expanded flat corrections are the most common type. Normally their C waves are 1.618 or 2.618 the length of their A waves.
The target calculated would see primary wave Y to end close to same level as primary wave W about 21.062. The purpose of combinations is to take up time and move price sideways. To achieve this purpose the second structure in the double normally ends about the same level as the first.
While the combination wave count at the weekly chart level does not currently work for Gold, it does still work for Silver. They do not have to complete the same structures for cycle wave b, and fairly often their structures are different.
At this stage, the duration of minor wave 2 now looks wrong. This wave count is now less likely.
DAILY CHART
Click chart to enlarge.
Minor wave 3 may only subdivide as an impulse and must move above the end of minor wave 1 at 18.207.
Within minor wave 3, minute waves i and now also ii may be complete. Minute wave ii is very close to the 0.618 Fibonacci ratio of minute wave i.
Minor wave 3 must move beyond the end of minor wave 1 above 18.207. A new high above this point would meet the Elliott wave rule and add confidence to the wave count.
Minute wave ii may not move beyond the start of minute wave i below 15.525.
The target for minor wave 3 expects the most common Fibonacci ratio to minor wave 1.
ALTERNATE WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
This alternate wave count looks at the possibility that the bear market may be over for Silver and a new bull market may have begun.
A series of two overlapping first and second waves may now be complete for cycle waves I and II, and primary waves 1 and 2.
A third wave now at two large degrees may be beginning.
Targets calculated for third waves assume the most common Fibonacci ratios to their respective first waves. As price approaches each target, if the structure is incomplete or price keeps rising through the target, then the next Fibonacci ratio in the sequence would be used to calculate a new target.
Within primary wave 3, no second wave correction may move beyond the start of its first wave below 15.525.
The large base channel about cycle waves I and II nicely shows where primary wave 2 found support. A lower degree second wave correction should find support (in a bull market) about a base channel drawn about a first and second wave one or more degrees higher.
DAILY CHART
Click chart to enlarge.
The expanded flat correction for intermediate wave (2) may again be complete. If this is correct, then a third wave up at three large degrees may be in the very early days for Silver.
The probability that intermediate wave (2) is complete is higher this week. It has now reached a more normal depth, close to the 0.618 Fibonacci ratio of intermediate wave (1), and fits perfectly as a common expanded flat correction.
This wave count would now expect to see a third wave up at three large degrees develop.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Silver is still range bound. A large symmetrical triangle may be completing. It is a downwards week during this triangle which has strongest volume suggesting a downwards breakout may be more likely than upwards.
Price is at support. Expect a bounce here to resistance.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Support is close by, at about 16.15. Next support below is about 15.60.
While strongest volume recently is for the (balance of volume) upwards day of the 16th of January, price has broken out of a smaller consolidation downwards. Price is now falling mostly of its own weight, and this can continue for a reasonable time.
On Balance Volume at this time frame is bearish. ADX is bearish. Stochastics may remain oversold for reasonable periods of time. Increasing ATR and widening Bollinger Bands support the trend.
While this daily chat is bearish, the strong support on the weekly chart should be given reasonable weight.
Published @ 11:33 p.m. EST.