Silver remains range bound. All Elliott wave counts remain valid.
Summary: The target is at 19.593 or 20.395.
An upwards trend is expected to develop. Use pullbacks as opportunities 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 first wave count expects that the bear market, which began from the April 2011 high, is incomplete. Although this wave count is presented first, it is not the preferred wave count.
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), minor wave 2 may not move beyond the start of its minor wave 1 above 17.331.
SECOND WAVE COUNT
This is the preferred wave count. It still has reasonable support from classic technical analysis, particularly at the weekly chart level.
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 likely to be over. Minute wave iii may only subdivide as an impulse.
If minute wave ii is over, then within minute wave iii no second wave correction may move beyond the start of its first wave below 16.046.
This wave count now expects an increase in upwards momentum as a third wave at two degrees begins. If price breaks above resistance above, then momentum may then build.
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. It also showed where intermediate 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.
This week price has again found support very close to the lower edge of the base channel.
Intermediate wave (2) should be over.
Intermediate wave (3) may only subdivide as an impulse. Minor wave 1 may be incomplete.
When minor wave 1 is complete, then minor wave 2 may not move beyond its start below 16.046.
Minute wave ii here is labelled as an expanded flat correction, finding support almost perfectly at the base channel. Expanded flats are very common structures.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price remains within the support and resistance zone.
On Balance Volume remains very bullish this week at the weekly chart time frame. This offers very strong support to the second and alternate Elliott wave counts. On Balance Volume has made a new high above the prior high of the week of the 2nd of January, but price has not yet. With On Balance Volume read as a leading indicator, this strongly suggests an upwards breakout may come.
Click chart to enlarge. Chart courtesy of StockCharts.com.
The second day of the last three upwards days showed an increase in volume to support the rise in price. The third day shows a decline in volume; the rise in price there was not supported. All three days have volume that is lighter than prior downwards days. The short term volume profile is judged to be bearish. Another test of support may come next week.
Price remains range bound. Overall, volume still suggests an upwards breakout may be more likely than downwards, because the strongest volume during the consolidation is for an upwards day.
The bearish signal from On Balance Volume on Friday is very weak. If On Balance Volume finds support at the next purple line, then that will be left as the only support line for current movement here.
Overall, this chart remains neutral to slightly bullish.
Published @ 05:10 p.m. EST on 20th May, 2018.