The upwards breakout noted last week has turned out to be false. Price is back within the consolidation zone.
Summary: There is more support from volume for upwards movement. Look out for another upwards breakout next week. A new high now above 17.331 would offer strong support to this view. The next target is either 19.593 or 20.395.
The trend is up. Use pullbacks as an opportunity to join the trend.
Always trade with stops, and invest only 1-5% of equity on any one trade.
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 now be complete as a flat correction.
Minor wave B is a double zigzag. All subdivisions fit. However, the purpose of a second zigzag in a double is to deepen the correction when the first zigzag does not move price deep enough. Here, the second zigzag has failed to deepen the correction. This is not technically a truncation, but the effect is the same. This structure makes no sense because it has not achieved its purpose. This must necessarily reduce the probability of this wave count.
At this stage, this first wave count still has the lowest probability of the three wave counts published for Silver.
Within intermediate wave (3), no second wave correction may move beyond the start of its first wave above 17.331.
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 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.
Intermediate wave (C) for this wave count is starting out slowly, with deep time consuming second wave corrections. This may indicate very strong upwards movement ahead, with a time consuming and strong impulse to complete.
If minute wave ii continues lower, it may not move beyond the start of minute wave i below 15.525.
Minute wave ii looks most likely to be over. Minute wave iii may only subdivide as an impulse.
Within minute wave iii, minuette waves (i) and (ii) may be complete. Minuette wave (iii) may only subdivide as an impulse.
Within minuette wave (iii), subminuette wave i may be complete.
Subminuette wave ii may not move beyond the start of subminuette wave i below 16.181.
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 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. If this base channel is breached at the daily chart level with one full daily candlestick below and not touching it, then the probability of this alternate wave count would be reduced.
Intermediate wave (2) should be over.
Intermediate wave (3) may only subdivide as an impulse. Within intermediate wave (3), minor waves 1 and 2 may be complete. Minor wave 3 would be incomplete. Minor wave 3 may only subdivide as an impulse.
Within minor wave 3, minute wave i may be complete. Minute wave ii may not move beyond the start of minute wave i below 16.181.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price remains within the support and resistance zone.
This week finds support at the lower edge of the triangle. The strongest week within the consolidation is the last upwards week. An upwards breakout now looks more likely than downwards. This expectation is now in line with what is expected for Gold.
Click chart to enlarge. Chart courtesy of StockCharts.com.
The upwards breakout was false. Price returned quickly back into the consolidation zone. Volume still strongly favours an upwards breakout over a downwards breakout at the daily chart timeframe, as well as the weekly now.
Published @ 03:06 a.m. EST on 29th April, 2018.