Gold, Oil & Indices (Equity & Bond Indices)

SILVER IS LANDING

Medium -term Analysis : I believe the ongoing and unstoppable intermediate rally that started in august on Silver has finally come to an end. A potential intermediate top is in place at 31.245 and the path of least resistance is to the downside from now on. Here is why:

(i) First and foremost, the rising wedge which has started on nov.16th a bearish reversal signal when it comes at the end of a meaningful rally, has been decisively broken on a closing basis. I have already been writing about it (see my dec.15th post) and this has happened last night.

(ii) The January 3rd Doji at 31 hinted that the bulls were loosing control of the price, the confirmation came not only with the short-term support up trendline break (in red) but also with (a) the bearish crossover of the two short-term eMAs 5 & 13 and (b) the support break at 29.50.

(iii) In the recent decline off the 31.245 peak, Silver has performed its first impulsive wave 1 down breaking down itself into 5 minor waves (not visible on the chart). This is the sign of a major trend shift.

(iv) The RSI is not only negatively diverging from the price since November, it has for the first time since august significantly fell below 50 well into negative territory.

(v) The measured price objective extracted from the massive inverted head and shoulders pattern is completed at 30$ ( see my dec.12th post for details). I wrote then , that the upside potential was limited. Silver has indeed rose only one extra dollar since to 31$.

(vi) Last but not least. Silver is rallying since 2001 (not visible on the chart). If one connects the several primary peaks between each other ( 2004, 2006 and 2008) one gets a confirmed long-term resistance uptrend line. The price always pulled back off these peaks. This line is passing through the price at 30 so I strongly believe that this is an extraordinary potential resistance level that should not be hurdled before several months to come.

All these bearish technicals converging with each other make a strong case for a medium-term bearish reversal

click here to see the chart :http://globaltechnicals.typepad.com/blog/2011/01/silver-is-landing-.html

Gunjack, SPX I have W.5 = W.1 at 1292 from the move up starting 1st July low but to be honest the NYSE breadth has been soooo weak I didnt expect the rally to last this long. Its been rallying on pure fumes this past month or so and no different today !

@DaveO - Thx I appreciate its difficult to explain a complex TA theory over a forum like this. Personally i find there is too much emphasis on short term trading nowadays...im not a intra day scalper as find it hit and miss with my lack of TA skills. I prefer seeing the bigger pic and then taking a posn which reflects that view over a period of time

Here endeth the lesson.

Gunjack, the trouble with EWA is can always find 3 counts. From the 3 alternates an experienced elliottician will have his "preferred" count and know exactly at what levels that is validated or invalidated. Hence EWA can be very tradeable if the right attitude is applied. At the very least a basic study teaches what to expect in terms of patterns which constantly repeat. I integrate EWA with a number of other tools in my clip.

I cannot attampt to teach EWA on this forum which has no facility for charts other than the basic default chart. Also would need an RT room to be effective.

5th waves can play out in variious ways and have about 3 typical projections one of which is the length of wave 5 can often = the length of the wave 1. A 5th wave can also be a "diagonal" which is prone to truncation or else an interminable narrow range affair.