Last analysis noted Silver had broken below support about 15.65, which had been held for just over a year, and that a small bounce up to resistance at prior support was expected for the week. A small range inside week exactly fits this expectation.
Summary: A classic downwards breakout from a very long held consolidation still looks like it has occurred, and now a backtest of resistance at prior support may have completed.
The trend is down. Bounces and consolidations may be used as opportunities to join the trend.
The next small wave down may be limited to no lower than 14.611; another small consolidation may be expected before this point.
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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This main wave count now has good support from classic technical analysis, so it will be favoured. This wave count looks highly likely.
The first 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.
So far, within the new downwards trend, there may now be two overlapping first and second waves and a third wave at two degrees may be unfolding lower. Look out for a selling climax to end one or both of minor wave 3 and intermediate wave (3). Commodities can exhibit very strong fifth waves; this tendency is especially prevalent in fifth waves to end third wave impulses.
Within minor wave 3, no second wave correction may move beyond the start of its first wave above 17.283.
DAILY CHART
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Intermediate wave (3) may only subdivide as an impulse. Within intermediate wave (3), minor waves 1 and 2 may now be complete.
Minor wave 3 may only subdivide as an impulse.
Within minor wave 3, minute waves i, ii, iii and now iv may all be complete. If this labelling is correct, then minute wave iii is shorter than minute wave i. This limits minute wave v to no longer than equality in length with minute wave iii, so that the core Elliott wave rule stating a third wave may never be the shortest is met.
If minute wave iii was over at the last low, then the small consolidation of the last few days may be minute wave iv. Minute wave iv may not move into minute wave i price territory above 15.748.
It is also still possible that minute wave iii may not be complete. The degree of labelling from the high labelled minute wave ii may again be moved down one degree, so that only minuette wave (i) within minute wave iii may be complete. Minuette wave (ii) may not move beyond the start of minuette wave (i) above 16.192. The invalidation point will be left at this point to allow for this possibility.
Minor wave 3 may end with one more low. When that is complete, then minor wave 4 may begin. Minor wave 2 was a very deep 0.96 zigzag. Given the guideline of alternation, minor wave 4 may be expected to be shallow and most likely a time consuming sideways type of correction, like a combination, flat or triangle. Minor wave 4 may not move into minor wave 1 price territory above 16.046.
SECOND WAVE COUNT
WEEKLY CHART
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Cycle wave b may still 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) may be continuing a little lower as a double zigzag.
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.
DAILY CHART
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This daily chart shows all of the second possible zigzag in the double for intermediate wave (B). The second zigzag is labelled minor wave Y.
Within the zigzag of minor wave Y, minute wave c must subdivide as a five wave structure. At this stage, current labelling shows it is unfolding as an impulse. Also at this stage, it is not possible to see minute wave c complete as the last low. Therefore, more downwards movement to complete the structure looks most likely.
If minuette wave (iii) is correctly labelled as complete, then minuette wave (iv) may not move into minuette wave (i) price territory above 15.748.
The channel is this week redrawn as an Elliott channel using the first technique: the first trend line is drawn from the ends of minuette waves (i) to (iii), then a parallel copy is placed upon the end of minuette wave (ii). So far this channel contains the small correction for minuette wave (iv).
Only one slight new low is expected for this second wave count to complete the entire structure for intermediate wave (B). As soon as that happens the short term invalidation point no longer applies and an intermediate degree trend change would be expected.
This wave count considers the possibility that the downwards breakout could have been false and that price may return to within the consolidation zone above about 16.00.
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.
This wave count remains valid if cycle wave II is considered to be continuing.
Cycle wave II may be continuing further as a double zigzag. The first zigzag in the double may be complete, labelled primary wave W. The double may be joined by a corrective structure in the opposite direction, a triangle labelled primary wave X.
The second zigzag in the double may be incomplete. It is labelled primary wave Y.
Within primary wave Y, intermediate wave (C) has passed both equality in length with intermediate wave (A) and 1.618 the length of intermediate wave (A). The structure of intermediate wave (C) is incomplete.
A target is calculated using the next Fibonacci ratio in the sequence.
Cycle wave II may not move beyond the start of cycle wave I below 13.569.
At the daily chart level, the structure of intermediate wave (C) would be seen as an impulse. The subdivisions and invalidation point would be the same as the second daily chart above, only the degrees would be different.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Last week looks like a classic downwards breakout below support from a very long held consolidation zone.
The breakout has support from volume. On Balance Volume is very bearish.
Stochastics can remain oversold for fairly long periods of time when this market has a strong trend. Only when it is oversold and then exhibits bullish divergence with price may a low in place be a reasonable consideration. That is not the case yet.
ADX indicates no clear trend yet as it is below 15. If it reaches to 15, then it would indicate a downwards trend.
This week may be a small throwback to the upper edge of the prior support zone. The prior support zone was from about 16.00 to about 15.65.
Only if price can close back above 16.00 would the downwards breakout be considered false.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price is finding resistance about 15.70 so far.
ADX can reach very extreme when Silver has a strong trend. At this time, it is very extreme, which can develop further for some weeks before the trend may end.
This small consolidation has brought Stochastics up from oversold. There is again room for price to fall.
Published @ 02:55 a.m. EST on 28th July, 2018.