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As I am seeking to Trade Silver rather than Gold I though I would open a specific Silver thread and cross reference to the Gold thread rather than post both on the same thread.  To open this one I am going to go back to the long term set up before looking at the current situation.  As IG do not hold very long term price data, and I like to have the whole picture, I am using long term charts from  Macrotrends.net.  If you haven't been on this website and like to see long term charts you should check them out on the following website address (note you can also download data, which I do to set up correlation graph analysis, often to debunk received wisdom such as Gold/Silver rise or fall contra to USD).

www.macrotrends.net

If you look at both the inflation adjusted and unadjusted (untick the log option) this simply puts an effective market floor around about $5.00.  We aren't that far off this now.  You will also note, from the unadjusted chart, that the whole market has posted a series of higher highs and higher lows, FWIW.

https://www.macrotrends.net/1470/historical-silver-prices-100-year-chart

I have a Quarterly chart that shows an expanding Triangle (some call a megaphone) since the late 1970s (around the time of the Bretton Woods removal of the USD from the Gold standard triggers a period of run away asset price inflation through runaway debt creation of money/liquidity).  This chart shows Silver to be at a critical juncture right now.  A drop through the long term supporting trend line suggests a drop to the market floor ($5.00).  A bounce and breakout of overhead resistance suggest a rally, possibly to new all time highs.  The expanding triangle might suggest that high could be in the $65.00 level, which would be consistent with a 1-5 long term bullish wave profile (there are some alternative EWT structures but as they all point to the same end I wont bother recounting them all).  Additionally, if there is to be a deflationary depression and as the market crash that precipitated the last one (1929) took about 3 years to conclude the top of this market could (big could there of course!) be in 2022.  But that is all just conjecture and not important at this point except to point out the potential for any risk reward calc.  

[See below chart for next level analysis]

XAGUSD-Quarterly_070619.thumb.png.4307f313b45f180b6981713944c3bad5.png

Looking at the Monthly chart, we can see the supporting trend line in more details with a lot of strong touches and prior pivots, which makes this a crucial line of support.  The price action since Dec 2015 has been contained in a narrowing channel (or consolidation Triangle), which is fast running out of road, a breakout ought, therefore, to be imminent.  There has been a strong case for a double bottom recently at 2 (purple) although alternatively this could all be an A-B-C retrace, but we don't have to worry about that for some time to come as both scenarios point in the same direction (i.e. up).  Only a breakout of the Triangle to the down side negates a rally scenario.  Very strong Positive Momentum Divergence (PMD) at the wave 3/C turning point in Dec 2015 set up the end of the prior Bear market (this is a trend change signal for me).

[See below chart for next level analysis]

XAGUSD-Monthly_070619.thumb.png.f3815b3522c6dc8d5c61483677229dab.png

Next up is the Weekly Chart and here we can see that consolidation in a bit more detail.  The price action conforms to a so-called complex retrace pattern with a lot of whipsaw action but essentially still an A-B-C retrace to wave 2 (Purple) and that double bottom.  That was followed by a rally to wave 1 (blue) and a potential turn at wave 2 (Blue) (see Daily chart for more detail).  Again there was strong PMD at wave 2 (Purple).  It is also noteworthy that the non commercials (or Financials) have consistently got the turns wrong during the consolidation (and before as it happens).  This is a contrarian dream.  The people who know these markets best are the precious metal specialists, i.e. the miners and refiners (so-called Commercials).  They are the ones with the inside information on true supply and demand and the state of the industry.  I always bet with the Commercials on Silver and Gold.  Recently the Non Commercials turned very (relatively) Bearish, just as Silver bounced off critical support and rallied away.  Was that the turn?  Not sure at this point, let's take a closer look at the Daily chart.

 [See below chart for next level analysis]

XAGUSD-Weekly_070619.thumb.png.ebde6548217b5ba07b871e0f15129d44.png

On the Daily you can the recent price action more clearly.  The potential wave 1 (pink) rally off the Wave 2 (purple) double bottom turn has turned down again into another retrace.  There was NMD at wave 1 (pink) after a 1-5 form rally.  I was therefore looking for an A-B-C retrace move to set up a much stronger rally that would carry through key resistance.  So far we have had an A-B-C to wave C (blue), with a good EWT internal form on all legs and PMD on the wave C (blue) turn.  Additionally this turn occurred at Fib 76/78% and a possible short term Head & Shoulders neckline but just short of a retest of that long term trend line.  Price has rallied up in a 1-5 form wave to the current point (wave 1 - green) and is stalled at overhead resistance and a parallel channel line.  As with Gold we have a couple of pin bar rejections off resistance.  At this point I would not be surprised to see a bearish phase but will it be a retrace to a higher low or a retest of that long term trend-line?  Who knows?

There are frustratingly at least 4 scenarios at this point, but only 1 Bearish long term, as follows:

  1. The market punches through the overhead resistance (Gold may be a good early indicator for this - see my Gold thread)
  2. The market does retrace to put in a small A-B-C to wave 2 (green) and then the rally really gets going.
  3. Another leg down to wave 2 (blue - repositioned) for a test of the LT trend line before that rally
  4. Bear breakout.

Finally, let's look at the short term chart. [See below chart for next level analysis]

XAGUSD-Daily_070619png.thumb.png.082c4c2258fe6051b981f5a20651c6b0.png

On the 1 hour chart then I have a possible wave 1 (green) rally off the wave 2 (Pink) turn (same as Wave C blue).   The form is a good 1-5, little chance of this being an A-B-C but you can never fully rule it out.  Pin bar rejection off near term resistance and small A-B (brown).  If this is all correct then the next phase should be down to retest support at 1450 or 1440 and then we will see what happens next.  As with Gold, a break above the near term resistance (1510) suggest the rally is on. 

XAGUSD-1-hour_070619.thumb.png.bd817a70e4832d90854796087b594fa5.png

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Silver , as seen in my chart, has reacted reasonably well to the fib levels.  I guess people will now be looking for a break below that blue zone or above that yellow trend line. I have noticed that the Gold:Silver ratio is historically very high & maybe that may either pause or reverse

Capture silver.PNG

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Hasn't the gold:silver ratio been high since the 19th century?  Silver hasn't been a money of account for centuries now.  Gold is where it's at as a store of value.

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Just now on twitter

Capture silver.PNG

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The reason Silver is more attractive than Gold to me is twofold:

  1. It has not rallied as hard as Gold of late so offers more short term upside and less downside risk than Gold, relatively.
  2. In the past Silver has been seen similar moves to Gold but in a more amplified way.  If you look at the 2011 commodities peak your will see that while Gold made nearly 700% gains Silver made 1100%.

Maybe it is my Spidey-sense but I remain unconvinced we have seen a true breakout on either, despite recent higher highs.  The rallies have been straight up, I will need to see a pull back or a breakout of a significant level, neither of which we have seen yet.

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Spidey-sense seems to be working.  Silver has put in a decent Bearish drop, Gold also but less impressive.  However now we are getting a potential reversal into a rally.  There is PMD; and credible 1-5 wave pattern down to the turn (probably wave A) followed by a small 1-2 and rally.  There is an unclosed gap around about a retest of the previous channel breakout zone.  I am expecting a strong rally in wave B (opposite to that I see on stocks!) before another bearish move to finish off the retrace.  Gold should do something similar.

 

 XAGUSD-1-hour_110619.thumb.png.a04040479883cef885f4d12dbe9e1481.png

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net long speculative positions near lows

Capture silver.PNG

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Silver is similar to Gold, unsurprisingly, except that it has not posted a higher high but is currently shaping up for a retrace conclusion in wave C.  This would a fast move down from here.  However, as with Gold, we may yet see a reversal and higher high, with a test of a potential Flag line or longer term Weekly resistance trend line to send the market back down.

As with gold, there are too many scenarios for me to take a trade at this point.  I will wait for either a firm break out of overhead resistance or a retest of lower Support to get Long.

XAGUSD-Daily_150619.thumb.png.c94f9eceb1df84ccf97d4fde0f5ffb09.png

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On 12/06/2019 at 16:54, elle said:

net long speculative positions near lows

Capture silver.PNG

 

Could you provide the source of this info?  Thanks ...

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On 07/06/2019 at 16:50, Mercury said:

The reason Silver is more attractive than Gold to me is twofold:

  1. It has not rallied as hard as Gold of late so offers more short term upside and less downside risk than Gold, relatively.
  2. In the past Silver has been seen similar moves to Gold but in a more amplified way.  If you look at the 2011 commodities peak your will see that while Gold made nearly 700% gains Silver made 1100%.

Maybe it is my Spidey-sense but I remain unconvinced we have seen a true breakout on either, despite recent higher highs.  The rallies have been straight up, I will need to see a pull back or a breakout of a significant level, neither of which we have seen yet.

 

Do you now think there has been a true breakout for gold?  This supposed 'long overdue retracement' sure is becoming long overdue.

Edited by dmedin

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Check out my Gold thread posts for what I think about Gold.  Don't know what you are referring to WRT a long overdue retracement (I assume you mean on Gold).

With respect to Silver, and I have no reason to expect any material directional divergence between Gold and Silver at this time, I don't see a material breakout yet.  I would want to see a break of 1540ish (the first weekly trend-line.  However the crucial breakout point for Silver is the long term resistance trend-line up around 1700ish at this point (see initial posts on this thread for my analysis on this).  My view, as expressed in the previous post herewith, is that there is another leg down of some sort on Silver BUT if I am wrong on that then the 1540 breakout may be a Long event.  However I would also want to see congruence with Gold, maybe also Platinum, and a fundamentals case for a strong and long term sustainable rally on precious metals generally, and I don't think we are there yet on that.

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