A small range inside week leaves both Elliott wave counts the same.

Summary: The first wave count allows for new lows below 11.703. The final target is at 7.41.

The second wave count expects new highs substantially above 49.752 in coming years. For the short to mid term, a deep pullback may continue, which may end about 18.605. This wave count would be invalidated with a new low below 11.703.

This week the wave counts are swapped over and renamed “first” and “second”. 

ELLIOTT WAVE COUNTS

FIRST ELLIOTT WAVE COUNT

MONTHLY CHART

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This first wave count has a better look in terms of Elliott wave structures. It may have a slightly higher probability. This is in line with the first and second wave counts for Gold.

It is possible that the zigzag for Grand Super Cycle wave II may be incomplete. Super Cycle wave (b) may have completed as an expanded flat correction.

Cycle wave b within the expanded flat of Super Cycle wave (b) is a 1.25 length of cycle wave a. This is within the most common range for B waves within flats of up to 1.38 times their counterpart A wave.

Cycle wave b within Super Cycle wave (b) subdivides as a double zigzag. This is a very common Elliott wave corrective structure, particularly in a B wave position. This part of the wave count has an excellent fit; all subdivisions are correct and the structures are common. This resolves the problem that the first wave count has of the triangle trend lines not being strictly adhered to.

A target is calculated for Super Cycle wave (c).

WEEKLY CHART

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Super Cycle wave (c) must subdivide as a five wave structure, most likely an impulse. Cycle wave I within Super Cycle wave (c) may have just begun.

Cycle wave II may not move beyond the start of cycle wave I above 29.772.

DAILY CHART

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Cycle wave I must subdivide as a five wave structure, most likely an impulse. Primary wave 2 within cycle wave I may not move beyond the start of primary wave 1 above 29.772.

Intermediate wave (2) now looks like an obvious three wave structure. It looks likely to be over here.

SECOND ELLIOTT WAVE COUNT

MONTHLY CHART

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The bear market for Silver may be complete.

This Elliott wave structure for this bear market is labelled as a single zigzag for Grand Super Cycle wave II. Single zigzags are the most common Elliott wave corrective structure.

Within the zigzag: Super Cycle wave (a) subdivides as a five wave impulse, Super Cycle wave (b) subdivides as a complete regular contracting triangle, and Super Cycle wave (c) subdivides as a complete five wave impulse that is relatively brief and shallow.

Elliott wave triangles normally adhere strictly to their trend lines. The triangle for Super Cycle wave (b) does not; the lower b-d trend line is overshot, which reduces the probability of this wave count and is one reason for publication of the first wave count.

When charts are drawn on a semi-log scale, price has now breached the upper edge of the trend channel. Copy this channel over to weekly and daily charts. The upper edge of this channel may now provide support.

Grand Super Cycle wave III must subdivide as a five wave impulse at Super Cycle degree.

WEEKLY CHART

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Grand Super Cycle wave II may be a complete zigzag. A new bull market may have begun for Silver.

The channel about Grand Super Cycle wave II is copied over from the monthly chart and extended outwards.

Super Cycle wave (I) may subdivide as an impulse or a leading diagonal. An impulse is much more common, so that is what shall be expected unless overlapping suggests a diagonal should be considered.

Cycle wave II may not move beyond the start of cycle wave I below 11.703.

DAILY CHART

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Cycle wave I may be a complete five wave impulse. Cycle wave II may now begin as a multi-week pullback. Cycle wave II would most likely subdivide as a zigzag. The most likely point for cycle wave II to end may be the 0.618 Fibonacci ratio of cycle wave I. If this target is wrong, then it may not be low enough. The first major correction within a new trend is often very deep.

TECHNICAL ANALYSIS

WEEKLY CHART

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The previous upwards trend reached very extreme and RSI reached deeply overbought. Now a bearish candlestick reversal pattern completes, which has support from volume. This bearish signal should be given weight in these circumstances. Either a 180° reversal or a time consuming consolidation may be expected here. A doji this week does not change this view.

DAILY CHART

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There are now two bearish candlestick reversal patterns on the daily chart. The second one as a Bearish Engulfing pattern is very strong and has strong support from volume. This supports the Elliott wave counts.

However, a pennant pattern may be forming. These are continuation patterns. If price breaks above the upper edge of the pennant on an upwards day that has support from volume, then that would constitute an upwards breakout. The target would then be at 34.51.

Published @ 11:19 p.m. ET on August 23, 2020.

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New updates to this analysis are in bold.