Upwards movement breached the short-term invalidation point in last week’s analysis. Price remains within a consolidation zone.

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 about 18.605 to 18.104. This wave count would be invalidated with a new low below 11.703.

ELLIOTT WAVE COUNTS

FIRST ELLIOTT WAVE COUNT

MONTHLY CHART

Click chart to enlarge.

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).

WEEKLY CHART

Click chart to enlarge.

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.

DAILY CHART

Click chart to enlarge.

Cycle wave I must subdivide as a five wave structure, most likely an impulse.

A new downwards trend may have begun with 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.

Upwards movement of the last week may be another second wave correction, labelled now minor wave 2. Minor wave 2 so far looks like a three wave structure. Minor wave 2 may not move beyond the start of minor wave 1 above 25.961.

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

MONTHLY CHART

Click chart to enlarge.

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

Click chart to enlarge.

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

Click chart to enlarge.

Cycle wave I may be a complete five wave impulse. Cycle wave II may now begin as a multi-month pullback. Cycle wave II may be subdividing as a double zigzag, which is a reasonably common corrective structure. 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.

The first zigzag in the double may be complete. It is labelled primary wave W. The double may be joined by a complete three in the opposite direction, labelled primary wave X. The second zigzag in the double may be an incomplete zigzag, labelled primary wave Y. Intermediate wave (B) within primary wave Y may not move beyond the start of intermediate wave (A) above 25.961.

TECHNICAL ANALYSIS

WEEKLY CHART

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.

The downwards breakout by On Balance Volume suggests price may break below support, currently about 21.80.

Now a Bullish Engulfing pattern with a little support from volume and a slightly long lower wick suggests more upwards movement this week.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

While at the weekly chart level the Bullish Engulfing pattern has support from volume, at the daily chart level it does not. Price remains range bound with resistance at 25.7 and support at 22. There has not yet been a breakout.

Published @ 05:34 p.m. ET.

—
Careful risk management protects your trading account(s).
Follow my two Golden Rules:

1. Always trade with stops.

2. Risk only 1-5% of equity on any one trade.

—
New updates to this analysis are in bold.