Technicals | Jul 13 2016
Bottom Line 12/07/16
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 18.50 – 19.00 / 17.15 / 15.88
Resistance Levels: 22.74 / 25.76 / 27.05
Technical Discussion
We have now reverted from an initial trend reversal pattern succeeding and completing, to a full blooded proposal of an Elliott Wave count that continues to have further bullish outcomes attached to it over the coming months. The thing we like about Elliott Wave theory is that firstly it is the earliest trend identifier around bar none, plus it has a set of core rulings that clearly informs us when we are right and when we are wrong. So the theory embodies an ongoing 'prove / disprove' structure that keeps our analysis not only on track, but also accountable.
Reasons to revert to bullish:
→ 200 day moving average remains supportive
→ bullish cup and handle pattern target has now been met
→ resistance zone now broken above circa 18.50 – 19.00
→ Elliott Wave count starting to take on bullish structures
We were initially buoyed that a turnaround in Silver prices could be bubbling away when the cup and handle formed and attained target. Yet post this we now have other aspects to the chart that are sustaining price in a northerly direction. Firstly the 200 day moving average throughout the best part of 2016 has held prices above it. So from being a resisting force on a multi year basis, it now looks to have reverted to being supportive. And with price continuing to prove and breaking strongly through overhead resistance circa 18.50 – 19.00, it was certainly time to start adding some numbers to the overall patterns. So what we are now looking for moving forward, is some form of 5-wave pattern to evolve to the upside.
At the moment we have labelled this move as having a completed a wave-iii of (iii) of 3 , and if this interpretation is correct, it is about as bullish as you can get. More immediately though we are looking for some short term weakness over the coming days, with any upcoming consolidation ideally coiling away above the old resistance zone now acting as support. Price clearly rejected off the recent move to 21.23, and this is where we have locked in our wave-iii . It was on high volume as well so some profit taking definitely took place on this day. We also have some strong looking Type-A bearish divergence in play so further weakness / coiling is what is going to be needed to get this fully unwound back to an oversold position. This will then set the scene for another move higher to trigger once again. Nothing not to like here from a bullish perspective.
Trading Strategy
Put Silver on your watch list and any Silver related ASX stocks. We will be looking for a low risk set up to trade long over the coming days / weeks if the immediate wave-iv can form above old resistance. A micro triangle or a flatter type pattern would be ideal as either will be bullish.
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