This weekly chart shows the action well. In September, price hit the descending support line of the channel and attempted a recovery. However, at the end of October, it hit the descending resistance line of the channel and dropped like a stone. It's now being wedged in a corner, with support about $14. If it breaks $14, there's a 40c drop to the next support, which is major - below that is the November 2008 low of $9 with only minor pauses along the way.
It's tricky trading HP strategy under these conditions -because we have to be aware of the strong support/resistance lines. It may register as HP, but that may be short-lived.
Looking at the daily is enlightening. Using support/resistance strategy, I would have entered somewhere between the two purple arrows. Under HP, entry was delayed until the green arrow, some 3-5 days later and just two days before price bounced off support.
Of course, this is much easier in hindsight, as the channel was not evident until the green candle, two days before the first purple arrow. Then once the channel formed, the strength of the purple support became more evident.
Greetings Alan... this is excellent analysis and a great contribution to current perspectives on the metals especially silver.
I have a hunch its headed much lower so will watch the channel with interest.
Thanks
An alternative view of course is that the low for silver could now be in because of the many touches to the lows around the $14 mark or just under $14...
So the thing to watch with interest is the resistance line and to see what sort of energy it has when it reaches it again. Either way, the entry strategies around resistance and support will come into play again providing more practice and opportunity.
If you study the pattern in the larger image you have and then look at the rise from the low point on the left of the chart... you can see that the move higher was with energy in basically a five wave pattern up.
Then as it rolled over... you can see another five wave pattern down with a few "one-two"... "one-two" patterns in the middle but basically the fifth wave ending at the recent lows. We spoke about fractal patterns at the Retreat.
So what you've given us is a clear picture of the possibility of another five wave pattern up starting from the lows and penetration of the resistance will more than likely validate this.
Cheers Paul.
Is this what you mean re waves?
Alan... basically, you're on the right track but it depends on how close you want to look because of the fractal nature of wave patterns.
If you change time scales, you get the same patterns.
What you've indicated is waves within waves so if you zoom out a little this pattern is a series of "one-two" waves.
Send me the first image you used with the channel drawn in it and I'll number the bigger wave patterns.
Alan...
Ah, I see it...thanks very much Paul.
I have also drawn a channel for gold and would appreciate comments on validity. The daily chart tells a similar story as for silver. The HP signal was at the green arrow, the movement was impeded by strong resistance, and HP entry was several days after a valid support/resistance signal.
So, here's my attempt at the waves on the gold weekly. The white wave goes 1234345 - is that OK? The blue wave suggests we're in the 5th wave of a down trend.
I didn't mark the second 3,4 on the white wave
Elliot wave theory is complex. Its frying my brain just looking at these charts.
I agree with your daily gold channel
Cheers Nathan, I thought I smelled something offal cooking (get it?). Yeah, I have been repelled by previous attempts at understanding EWT. However, as my science editor used to say "if you can't explain something simply, using concrete nouns and direct verbs then you actually don't understand it properly, you are hiding behind jargon and waffle". She was an expert communicator and successful author and this was one of the most important lessons I ever learned. So I'm on a treasure hunt.
