Silver on Track for Test of ~16.000/SI
05/03/17 Weekly Re-Lay Alert – ‘Silver & the 2.50 Point Range Trading’:
“The Dollar Index dropped during the first two days of May, although it was only a minor drop. Gold also dropped the first two days of May. And Silver dropped the first two days of May… all in sync.
It was not until today that the focus left the Euro (see 4/26/17 Alert for detailed analysis on this topic & correlation) and returned to the Dollar, on the heels of the Fed meeting.
One of the important factors of recent days was Gold turning its daily trend down (on Monday) and joining Silver, the XAU, the HUI, etc. in that downtrend. That allowed the metals to trade in sync as they complete their projected dives into early-May.
As described since the XAU peaked in early-Feb., early-May represented the next intermediate cycle low in metals. In the case of Gold Stocks, May 3–10th represents the culmination of a 19-week high-low-(low) Cycle Progression, combined with other daily & weekly cycles. Silver has an overlapping 20-week high-low-(low) Cycle Progression, that projected a drop into May 8–15th.
As a result, May 5/8th is in focus with recent intra-month extremes (highs or lows) – on the 8–10th of Feb., Mar. & Apr. – reinforcing the focus on the coming days.
More important, however, is price action. And one aspect of that evolving price action deserves a review since it has been cited multiple times in the past month (as Silver repeatedly bumped up against ~18.50/SI). The following is an excerpt from the Sept. 17, 2016 Weekly Re-Lay:
Although it stretches before then, Jan. 2015 is where I will begin this discussion. At that time, Silver peaked at ~18.50/SI after a sharp 6-week rally. It then began its final descent to ~13.50/SI – a drop of roughly 5.00 (2 xs 2.50).
It’s very last drop was from ~16.00 to ~13.50 – splitting that 5.00 range in half and culminating its drop with a final, ~2.50 sell-off. Silver then surged to ~16.00 – an advance of ~2.50/SI – before consolidating. After finally exceeding that initial peak, Silver surged above 18.00, though it did not quite reach 18.50/SI – the next level.
It then pulled back to ~16.00/SI and then surged to ~21.00/SI, a blow-off rally of ~5.00. That eventually gave way to the July–August drop to… you guessed it… ~18.50/SI – a pullback of ~2.50/SI. The point?
If Silver gives a weekly close below 18.50/SIZ – as is expected – it would likely see a quick drop to ~16.00/SIZ, a level that also represents its ‘4th wave of lesser degree’ support.
[Further validating this trading range sequence, 2011–2012 saw multiple tests of key support at ~26.00/SI, creating lows in Jan. ’11 (before its final surge), in Sep. & Dec. ’11 (after its peak), and then in June & July ’12.
26.00/SI is two multiples above the recent 21.00/SI peak and 3, 4 & 5 multiples – of 2.50/SI – above 18.50/SI, 16.00/SI & 13.50/SI. When Silver finally broke through that support, it plummeted right to ~18.50/SI, where it found support for the ensuing year.]”
With Silver peaking near 18.50/SIN, it began a descent that should ultimately take it back to (at least) 16.00/SI. It triggered a weekly 2 Close Reversal sell signal on April 21st – a signal that should drive prices lower into May 4th or 5th and could drive them lower into May 8–12th.
Gold & Silver have sold off sharply after fulfilling all of the 2–4 week upside potential in mid-April, with Gold attacking monthly resistance (1284.2–1298.5/GCM) as Silver spiked to new intra-year highs and its upside LLH objective (18.635/SIK).
That was quickly followed by Silver’s weekly Turn-Key Reversal & 2 Close Reversal sell signal on April 21st, projecting 2–3 weeks of additional downside to follow. Gold finally turned its daily trend down & corroborated those signals.
As part of that decline…Silver was expected to see a sharp drop in the final two weeks of April and spike below 17.00/SI – a combination of intra-week extreme downside targets.
Initially, Gold was also expected to reach 1224–1230/GCM, potentially by month-end. The April 19, 2017 Alert described that objective this way:
That set the stage for a larger-degree pullback, with focus on an increasingly-synergistic support level in Gold. That support is at 1223.4–1230.3/GCM and includes the latest 3 weekly HLS levels, the weekly 8 Low MARC, weekly 21 High MARC & year-opening range high (resistance turned into support). This week’s low could corroborate that range.
It is conceivable that Gold, if it turns its daily trend down this week, could reach that support by month-end.”
Gold took a little longer to turn its daily trend down (a lagging/confirming indicator), delaying the timing for a drop to this level. Friday’s action, however, increased the synergy at that target range with another weekly HLS – at 1224.0/GCM for this week – AND the monthly HLS, at 1226.6/GCM for May. As a result, that target range could be tested as early as this week.
At the same time, Silver – which remains in a much weaker structure than Gold – waited until this week to reach its initial downside target. With new support and intra-week extreme objectives adjusting lower, Silver sold off to the overlap of its weekly & monthly support (16.49–16.50/SIN).
A more important range of support, however, exists around 16.00/SIN, which is also just below the intra-year low of 16.090/SIN.
The XAU continues to decline in fulfillment of its outlook for an overall drop into May 2017 – with an intermediate low possible in the coming days. Based on a ~30-degree cycle of intra-month highs & lows, that could stretch into May 8–10th.
The XAU maintains key near-term support around 79.45, with last week’s HLS at 79.70 and this weekly PHHS emerging at 79.60/XAU. The weekly 21 Low MARC is at 79.62/XAU. On a 2–4 week basis, a more significant level is around 77.50/XAU, where monthly support overlaps the early-March low.”
Gold & Silver Index (XAU) fulfilling 2–3 month outlook for overall drop into May 1–5th, the latest phase of a pivotal 19-week Cycle Progression. That should prompt a 1–3 week bounce. However, Gold stocks remain in the weakest technical structure and are expected to enter a new wave down after that rebound.
Silver’s April 21st weekly sell signal (Turn -Key AND 2 Close Reversal sell signals) is nearing fruition with Silver poised to attack critical support surrounding 16.000/SI… and likely bottom on May 8–12th. Gold remains on track for initial drop to 1223.4–1230.3/GCM – where decisive intra-year support exists.
See Weekly Re-Lay & INSIIDE Track for additional details on larger-degree cycles that could extend these anticipated sell-offs, particularly in the XAU & HUI.