SILVER: Elliott Wave and Technical Analysis | Charts – November 23, 2020
Downwards movement was expected to continue for both Elliott wave counts for Silver, which is exactly what is happening.
Summary: The downwards trend may continue. New Elliott wave targets are 14.385 for the mid term and 12.966 for the longer term.
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 mid term, a deep pullback may continue, which may end below 18.605. This wave count would be invalidated with a new low below 11.703.
ELLIOTT WAVE COUNTS
FIRST ELLIOTT WAVE COUNT
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 wave count for Gold (overall).
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 second wave count has of the triangle trend lines not being strictly adhered to.
A target is calculated for Super Cycle wave (c).
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 begun.
Cycle wave II may not move beyond the start of cycle wave I above 29.772.
Cycle wave I must subdivide as a five wave structure, most likely an impulse.
A new downwards trend may have begun with now three overlapping first and second waves.
Intermediate wave (3) may now begin to increase downwards momentum.
If intermediate wave (3) reaches 1.618 the length of intermediate wave (1), then primary wave 3 may be a longer extension at 2.618 the length of primary wave 1.
No second wave correction within intermediate wave (3) may move beyond its start above 25.928. If this invalidation point is breached, then labelling of intermediate waves (1) and (2) as complete would be wrong, and then primary wave 2 may be continuing sideways.
Primary wave 2 may not move beyond the start of primary wave 1 above 29.772.
Intermediate wave (4) and primary wave 4 may be more brief than their counterpart second waves. This is common behaviour for commodities.
SECOND ELLIOTT WAVE COUNT
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.
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.
Cycle wave I may be a complete five wave impulse. Cycle wave II may now begin as a multi-month pullback. Cycle wave II would most likely subdivide as a zigzag. A 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.
Primary wave A may have begun. It may be subdividing as an impulse. Intermediate wave (3) within the impulse may now be unfolding lower.
There may now be three overlapping first and second waves complete within primary wave A for intermediate waves (1) and (2), minor waves 1 and 2 and now minute waves i and ii. Minor wave 3 may be underway.
When primary wave A may be a complete five wave structure, then the short-term invalidation point no longer applies. Primary wave B may then unfold as any one of more than 23 Elliott wave corrective structures; it may be a quick sharp zigzag, or it may be a time consuming sideways consolidation.
No second wave correction within minor wave 3 may move beyond its start above 25.928.
If primary wave A does complete as a five wave structure, then primary wave B may not move beyond its start above 29.772.
Click chart to enlarge. Chart courtesy of StockCharts.com.
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.
This week a bearish signal from On Balance Volume offers further support to the Elliott wave analysis.
Click chart to enlarge. Chart courtesy of StockCharts.com.
The short-term volume profile is still bearish. ADX gives a strong bearish signal. This chart supports the bearish Elliott wave counts.
Published @ 02:55 p.m. ET on November 24, 2020.
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New updates to this analysis are in bold.