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Silver Bullet

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On ‎07‎/‎06‎/‎2019 at 12:50, elle said:

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

trend line still holding !

Capture silver.PNG

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Similar set up to that posted on my Gold/Silver rally thread.  Again the wave B (green) held, this time at Fib 62% ( a bit weaker than Gold perhaps, which is consistent with recent price action.  I wonder will that correlation continue on the way down? 

Also similar to Gold we have a small 1-5 down and now potentially tracing out an A-B-C retrace to retest the channel breakout zone, or a bit above perhaps.  Again a break to a lower low on this move, with a 1-5 down and an A-B-C up is bearish.  A retest of the 1490 would then be indicated and a break of this brings up the scenarios for a longer bearish move previously noted.  Alignment between Silver, Gold and USD is obvious at present as it seems that Fed policy in particular holds sway.  Not sure we will have to wait for final Fed rate decision on USD pairs, maybe ECB and BoE will have something to influence before that but perhaps Silver and Gold will be more reliant on the Fed?

XAGUSD-1-hour_120719.thumb.png.a5483a69e2f1cc5437f50a90708efd06.png

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Silver is a bit more buoyant than Gold just now and following a slightly different form in that the 1-5 down took a bit longer to achieve and looked like a breakout initially but then rallied back sharply.  Price action within a consolidation zone is often like this, lots of whip saw action and we should see a turn and drop again once the market has tested a suitable resistance zone (Fib 76/78% is just above.  Non Commercial net COT data is deteriorating for a high 2 weeks ago, as with Gold, and again if this continues we will see a drop off next week.

XAGUSD-1-hour_130719.thumb.png.f65a53568d28293c895d2565e7a8a379.png

 

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Posted (edited)

Silver certainly seems to be showing the kind of whip saw price action one would expect inside a consolidation Triangle.  at one point it looked like a retest of the weekly chart down sloping trend line might be on and it may yet, or maybe a test of the Fib 76/78%.  Having said that there is a decent case for a wave B turn right now, I am Short off this turn.  With USD seemingly beginning a retrace rally and Gold also turning we may see a strong carry down on Gold/Silver.  Also have NMD at the turning point with a 1H chart pin bar in play.

XAGUSD-1-hour_140719.thumb.png.f1a1acb5f4d8a150da463a2ff819d15d.png

Edited by Mercury
for to add a point

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The whipsaw continues but now we appear to be at the moment of truth.  Silver and Gold just took a run down along with an underlying USD rally.  Looks like the markets are getting a bit nervy about the Fed decision at the end of the month.  Still this is not yet resolved so could we see a breakout through that weekly LT resistance trend line and does that matter if Gold remains subdued?

Short term, if we have just seen a top and small 1-2 retrace rally then a break below the 1H chart Triangle could indicate a Bearish phase.  The move up looks to be a classic chaotic wave B within a consolidation Triangle (Weekly) also describing a series of A-B-Cs.  In addition there is NMD between the A and C (brown), a good indicator of a retrace move termination.

 It does rather seem line Gold and Silver traders are looking to the Fed rate cut to stimulate further buying, whether as an inflation hedge or as a sign that the Economy is weak.  We may have to wait until the end of the month for this to play out and that could mean more consolidation whipsaw price action or a full retrace move.  Despite being a perma bear on stocks, I don't quite see this as a full turning point yet, but who really knows...  For now I am content to chance a Short at such a pivotal resistance point, especially as I don't see the retrace as having fully played out yet and Gold has lost its oomph.

XAGUSD-1-hour_160719.thumb.png.8058454d0a0092a1519c685cf7829a93.pngXAGUSD-Daily_160719.thumb.png.430be45e15b379fd1b9a7dacb3d9d0b0.png

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Looks like the Silver bullet is back on.  I have reversed my positions on a strong breakout to the upside.  "As goes Silver, so goes Gold"?

 XAGUSD-4-hours_160719.thumb.png.19dc7f92b4f8a311484cfb36c331be3c.png

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Gold dropped today and silver went up.  huh?

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Well Gold rallied hard recently while Silver lagged.  These markets are related but not identical.  Besides it may be more correct to say Silver rallied while Gold lagged in consolidation pending a rally..?  The day is not yet over and the week only just begun.

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Silver remains buoyant today and is approaching a key resistance breakout point (circa 1625).

XAGUSD-1-hour_180719.thumb.png.f192d95b669ae24b578e5aac32a4621a.png

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Yes, it is looking good for the 'precious' this week.  🤠👍

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My view on Silver is similar to Gold, see my Gold/Silver in LT rally thread.  I am seeing a small scale retrace that will likely retest the Silver key resistance breakout level (circa 1620).  A rally away from this level will be strongly Bearish and we need to see a close above the key level for the week.  There is a lot of over hanging resistance to get through before Silver is in clear air so this could take a few whipsaw turns to get going (alternatively it could cut through like a hot knife through butter.  I am already Long from lower down and stop protected at BE so my strategy now is to enter a pyramiding phase.  As I have mentioned before, Silver is likely to out perform Gold, if the 2011 rally is anything to go by, and Silver was lagging and retraced further than Gold down to 2015 so the upside here is much larger.

On the watch out side, Silver is more volatile an spiky than Gold so large draw downs are to be expected.  This one could easily spike down through that key support/resistance level before rallying away.

XAGUSD-1-hour_190719.thumb.png.95f2b48a2fd26d4a2a495b7f0778e644.png

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    • Going back to my FTSE analysis I see things as follows: 2 scenarios present themselves, other than fresh ATHs that is: 1) the move down to the turn on Thursday was a wave 1 (blue) off a larger scale wave 2 (purple) that should retrace, maybe in a complex fashion with a lot of whip saw price action maybe not, let's see; 2) the recent rally and drop to a new low was a 1-2 (red), which indicates a much stronger leg down is immanent. The #2 scenario would only be valid if price holds below the previous high (circa 7300).  I favour the #1 scenario. There was PMD on the 4H chart at wave 1 (blue), which suggests this is a turning point.  Also the 4H chart shows a 1-5 wave down to the 1 blue, which would be motive and suggests a trend change to the bearish side. There was strong NMD at wave 2 (Purple) which is consistent with a large scale retrace move. Just as with the US large caps, after the stop and turn up there was a sharp retrace drop to the Fib 76/78% zone before the current rally.  As the FTSE was in out of hours at the end of the week this market has not rallied as hard as the US markets.  Also we may yet see fresh ATHs on US large caps while the FTSE100 only puts in a counter trend rally. If we do see fresh ATHs on US large caps and only a retrace on FTSE and probably Dax and Nikkei as well then comparing these markets will be instructive for calling that top on US large caps.  We may, alternatively, see only a retrace on US large caps too if the top of the market in already in. Conclusion: we can anticipate a bullish period on all major indices BUT should guard against a quick reversal on FTSE 100 that would set up scenario #2.  Either way this market looks to have topped out so the coming months though to the Autumn will be critical to deciding things on all indices, and likely quite a few other markets. I am Long the FTSE 100, coincident with my Dow Longs and will swing this up for now but my bearish bias for the long term will keep we watchful for a break down of this rally and I will not be pyramiding this one, far too risky until things are resolved.
    • "....more broadly we have seen currency wars but these have not really captured the imagination of the MSM yet" Actually I'd argue we have had currency wars for some years already. History shows it goes in the following order: Currency war, Trade war, War. (Regrettably).  If I recall correctly the market falls of early 2015 (about 20% down) were blamed on Yuan being devalued by Chinese manipulation. Way before Trump! "....we suddenly get a super massive set of central bank policies that drop rates to zero" Again I'd say that has been going on for some years. Arguably you could say about 35 years since the Plaza Accord. Once fiat became unaccountable (no gold standard) the politicians proceeded to spend, spend spend =debt,debt,debt. Expect MMT  (US Democrats pushing modern monetary theory) to allow them to continue in that vein. Again history says these currencies will all eventually disappear, like species, approx 95% no longer exist.  Broadly I agree with what you say. The present financial system is critically sick that's for sure. It has propped up assets with huge doses of QE and zero rate interest policy (expect more of that when the ECB meets next month). You are correct about the size of stock markets. If the global market was a horse the bond market would be three legs of it! I digress.... However, if you are faced with massive debts then here are your options: 1) Default - Argentinian/Zimbabwe style. Not likely, at least until all other options tried - as that's the end game. 2) Grow the economy at a fast enough rate to meet and exceed future repayment obligations. In a global low anaemic growth environment? Unlikely. 3) Inflate like mad. It's the only viable option. You could, reasonably say, that after 3 massive QE sessions and ZIRP and now  NIRP that deflation is winning. Arguably it's all been a waste of time / money. Where's the kitchen sink? Presumably more of the same and then some helicopter money? It seems to me that this is more in line with Japan (targeted 10yr bond rate = 0%) which someone said in the 90s was  "...the dress rehearsal. The rest of the world will be the main event". Trying to get inflation without destroying the USD global reserve status is unlikely in my opinion and you can't help but feel that some sort of Bretton Woods global RESET will eventually emerge. It's certainly what Russia, China, Syria, Iran, Turkey etc are angling for.....and their central banks have been big buyers of bullion recently. That's why I'd recommend holding gold. Not as a trading strategy (which is what I appreciate this forum is). Nice sharing these thoughts with you>
    • So it looks like my crazy set of channels on the Daily chart is still holding well.  The breakout of the last channel line, which coincides with a nice zone of lateral S/R was retested but failed as I noted in my previous post.  I got Short off an initial rejection from this zone and Resistance line with a tight stop but price never came back so nicely in on a couple of Short positions and stop protected at BE.  Price moved back through the monthly lower channel line (purple) and put in a quick daily candle failed retest and dropped away.  It is possible we could see another retest of this resistance zone before any further move but a break below the 5760 level would be indicative that the Bear has resumed and obviously a break of the previous low around the $56 mark would once again bring $50 into focus.  
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