Last week’s analysis expected an upwards trend to develop. A slightly higher high and a higher low completes a green weekly candlestick, which fits expectations.
Summary: The target is at 19.593 or 20.395. Volume and On Balance Volume are both bullish. An upwards breakout from a consolidation zone looks likely to happen within a few weeks.
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
WEEKLY CHART
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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.
DAILY CHART
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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
WEEKLY CHART
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This is the preferred wave count. It 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.
DAILY CHART
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Minute wave ii looks likely to be over. Minute wave iii may only subdivide as an impulse.
Minute wave iii may have begun with a series of now four overlapping first and second waves, which may be only the start of minuette wave (i).
When minuette wave (i) is complete, then the following correction for minuette wave (ii) may not move beyond the start of minuette wave (i) below 16.046.
This wave count now expects an increase in upwards momentum as a third wave at four degrees begins. If price breaks above resistance above, then momentum may then build.
ALTERNATE WAVE COUNT
WEEKLY CHART
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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.
Price continues to find strong support about the lower edge of the base channel.
DAILY CHART
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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.
Minor wave 1 may have begun with now four overlapping first and second waves. This wave count also expects an increase in upwards momentum.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price remains within the support and resistance zone.
This week On Balance Volume has made another new high above the last two swing highs that occurred back in the week ending 13th of November, 2017. On Balance Volume is a leading indicator, so price looks very likely to follow through with a new high above 17.39. Overall, this chart is bullish to neutral, but bullish signals are strong.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
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.
Trend lines on On Balance Volume are slightly adjusted to be more technically significant. Resistance is reasonably strong; a break above the yellow line would be a reasonably bullish signal. Support is weaker; a break below the purple line would be a weak bearish signal.
Published @ 10:25 p.m. EST on 27th May, 2018.