A little more downwards movement to end within the range of 16.173 to 15.874, or at target 16.093, was expected before a trend change. Price moved slightly lower, turning at 16.106, within the range and just 0.013 above the target.
Summary: Look for a bounce to continue to a target at 17.109. Thereafter, a new big downwards trend may develop.
A new high above 17.680 would be very bullish. The target would be at 20.395.
Last monthly charts can be viewed here.
New updates to this analysis are in bold.
ELLIOTT WAVE COUNTS
MAIN WAVE COUNT
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.
Intermediate wave (1) down subdivides well as a five wave structure.
Intermediate wave (2) may be an incomplete flat correction. Minor wave B may have moved lower as a double zigzag. The purpose of a second zigzag in a double is to deepen the correction. Minute wave y moved below the end of minute wave w to achieve its purpose.
Within flat corrections, the common length for B waves is from 1 to 1.38 times the length of the A wave. The common range for minor wave B would be from 16.173 to 15.874. Minor wave B is within this common range; it is 1.08 times the length of minor wave A. This indicates an expanded flat.
Minor wave C upwards would be very likely to make at least a slight new high above the end of minor wave A at 16.961 to avoid a truncation and a very rare running flat. Minor wave C may end about the 0.618 Fibonacci ratio of intermediate wave (1) at 17.109. If this target is wrong, it may not be quite high enough. If price reaches 17.109 and keeps rising, then the next target would be at 17.381 where minor wave C would reach 1.618 the length of minor wave A.
Intermediate wave (2) may not move beyond the start of intermediate wave (1) above 17.680.
SECOND WAVE COUNT
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.
Minute wave ii may now be a complete zigzag. Minute wave iii may have begun. The most common Fibonacci ratios are used to calculate targets for minute wave iii and minor wave 3.
Within minute wave iii, no second wave correction may move beyond the start of its first wave below 16.106.
ALTERNATE WAVE COUNT
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 three overlapping first and second waves may now be complete for cycle waves I and II, primary waves 1 and 2, and now intermediate waves (1) and (2).
A third wave now at three 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, intermediate wave (2) may not move beyond the start of intermediate wave (1) 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.
Intermediate wave (2) may now be a complete zigzag. Intermediate wave (3) may have begun. Intermediate wave (2) ended above the base channel.
A target is calculated for intermediate wave (3), which expects the most common Fibonacci ratio.
Within intermediate wave (3), no second wave correction may move beyond the start of its first wave below 16.106.
Click chart to enlarge. Chart courtesy of StockCharts.com.
The support line on the symmetrical triangle is redrawn this week. Price remains within the support and resistance zone.
On Balance Volume also remains very bearish. This would offer more support to the main Elliott wave count, which is overall bearish, but puts some doubt on the expectations in that wave count for a strong bounce before a new bearish wave down.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Silver continues to be range bound with resistance about 16.90 and support about 16.15. During this smaller consolidation (within the larger consolidation on the weekly chart), it is still the downwards day of the 20th of February that has strongest volume, suggesting a downwards breakout may be more likely than upwards.
For the short term though the volume profile is bullish.
A downwards swing to support has ended with Stochastics just reaching oversold. Look now for an upwards swing to resistance to end when Stochastics reaches overbought. Price does not move in straight lines within consolidations; look for choppy and overlapping movement.
Published @ 08:56 p.m. EST.