SILVER: Elliott Wave and Technical Analysis | Charts – February 2, 2021
The first Elliott wave count may be valid, but a change to this wave count at the monthly chart level changes the expected direction.
Summary: If the bull market has resumed for Silver, then the next target for an interruption to the trend may be at 33.73 and a long-term target at 50.98. This scenario is outlined in the second alternate wave count.
The first wave count is now substantially changed. For the mid-term, it is bullish with a final target at 43.44. The final invalidation point for this wave count is now at 49.752.
ELLIOTT WAVE COUNTS
FIRST ELLIOTT WAVE COUNT
MONTHLY CHART
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This first wave count still has a better look in terms of Elliott wave structures.
It is possible that the zigzag for Grand Super Cycle wave II may be incomplete. Super Cycle wave (b) may be continuing higher as an expanded flat correction, and within it cycle wave c may be continuing higher as an impulse.
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 new target is calculated for Super Cycle wave (b).
Super Cycle wave (b) may not move beyond the start of Super Cycle wave (a) above 49.752.
WEEKLY CHART
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Cycle wave c must subdivide as a five wave structure, most likely an impulse.
Primary waves 1 and 2 may be complete. Primary wave 3 may be underway. Primary wave 3 may only subdivide as an impulse. Within primary wave 3: Intermediate waves (1) and (2) may be complete, and intermediate wave (3) may only subdivide as an impulse.
Within minor wave 3, no second wave correction may move beyond its start below 24.283.
DAILY CHART
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The daily chart focusses on primary waves 1, 2 and 3 within cycle wave c.
A target is calculated for primary wave 3.
Within primary wave 3: Intermediate waves (1) and (2) may be complete, and intermediate wave (3) may have begun and may only subdivide as an impulse. Within intermediate wave (3): Minor waves 1 and 2 may be complete, and minor wave 3 may have begun and may only subdivide as an impulse. Minute waves i, ii and iii within minor wave 3 may be complete. If this labelling within minor wave 3 is correct, then minute wave iv may not move into minute wave i price territory below 26.003.
No second wave correction within minor wave 3 may move beyond its start below 24.283.
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 continue as a multi-month pullback. Cycle wave II may be subdividing as a regular flat. A likely point for cycle wave II to end may still 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.
Cycle wave II may not move beyond the start of cycle wave I below 11.703.
DAILY CHART
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Primary wave B may have moved higher; it is now a 1.01 length of primary wave A.
Primary wave C may now move lower for this wave count to at least make a slight new low below the end of primary wave A at 21.749 to avoid a truncation and a very rare running flat.
ALTERNATE DAILY CHART
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If cycle wave II is over, then it would have lasted only 7 weeks to the 20 weeks of cycle wave I, and be only 0.44 the depth of cycle wave I. While this is possible, it is less common than a longer lasting and deeper second wave correction as the first large correction within a new trend. Some confidence in this alternate wave count may now be had with a new high above 29.772.
Cycle wave III may only subdivide as an impulse. Within the impulse: Intermediate wave (1) may be complete, and intermediate wave (2) may be complete as a very deep expanded flat. The structure of intermediate wave (3) is incomplete, and within it a target is calculated for minor wave 3.
No second wave correction within minor wave 3 may move beyond its start below 24.131.
When primary wave 1 is complete, then primary wave 2 may not move beyond the start of primary wave 1 below 21.749.
The target for cycle wave III expects it to exhibit a common Fibonacci ratio to cycle wave I.
TECHNICAL ANALYSIS
WEEKLY CHART
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There is now an upwards trend in an early stage, but price has not closed above important resistance at 29.91. Confidence in continuation of this trend would require a close above resistance at the daily chart level. With both price and On Balance Volume at resistance, risk that price may reverse here is reasonable.
DAILY CHART
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A target calculated from the measuring gap is at 31.22; this has not been met, but it is close. The bearish long upper wick on the last completed daily candlestick suggests it may not be met. If that gap is closed with a low below 27.77, then that would be a bearish signal. The gap would then be a pattern gap within a larger consolidation.
After a blow off top, some consolidation may be expected before the upwards trend resumes.
Published @ 03:57 p.m. ET.
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New updates to this analysis are in bold.