Experiment Results
It's time to check the results of my silver analysis. Back in November, I wrote an update on silver, in the first part of which I made an error analysis session of an earlier post and in the second part I added an experimental clone chart. There were two calculated targets: a price target and the time target.
In December, I was out of patience and was going to write a post once silver hit the price target. But it was crucial to wait until the time came to check both results on the date outlined in my earlier post. Below I've included the experimental clone model chart from my earlier post and added fresh comments highlighted in red to show the results and changes for your convenience.
Chart 1 Silver Weekly: Amazing Math
Chart courtesy of tradingview.com
What do we see? Let’s start from the pleasant result. Yes, the price target was hit accurately almost cent to the cent: The $13.65 projected target versus the actual low of $13.63 in December. I was really surprised by this outcome as it strengthens my confidence in the world of numbers. By the way, the AB/CD concept target ($13.7) from my September post has also been hit.
The time action missed the target and spoiled the perfect picture. I expected to hit the low this week after the 15 bars (weeks) have expired. In fact, silver reached the target earlier in December within a 9 bars (weeks) period. It's bad luck, but sometimes errors bring new discoveries.
If you divide 217 (days in medium clone) into 63 (actual number of days in the small clone), you get 3.444. It means that the small period is 3.444 times shorter than the medium period. Then, if you divide 3.444 (actual ratio) into 2.129 (projected ratio), you get 1.618 or the most common Fibonacci ratio, amazing discovery! It means that this decreasing sequence has a ratio different from 1.
After all, it was happy fortuity to reach the target ahead of time during the experiment. One thing is still uncertain – was it the bottom or not?
What's Next?
Chart 2 Silver Monthly: Slowly But Falling
Chart courtesy of tradingview.com
In the monthly chart above I highlighted (in the blue dashed horizontal line) the former resistance turned to become the current support at the $14 level. It was hard to crack this level in 2006-2007 when the market tried to break it to the upside. Last month was first to close below it, but as you can see today, market is back above it and few days left until the end of the month. If the January candle closes above $14 we should consider the December break as false.
The global picture still points at silver's weakness. The downtrend is still intact, killing the price softly, but the angle is flattening and that should worry bears, as well as that the price spent more than a year above the mid-channel (red dashed midline). The October maximum at the $16.34 level is the “thin red line”. Beyond this resistance, you will see the break of a multi-year bearish trend. This is important information for those of you who are betting on bullish reversal.
Long term players are recommended to watch the $12.5 level (mid-channel) and $16.34 marks for a break.
Chart 3 Silver Daily: Sideways
Chart courtesy of tradingview.com
The daily chart doesn’t show the clear signal. December extremes manage to contain the price between the $13.62 and $14.63 levels so far.
There is not enough momentum for Bulls as the two upside attempts failed to break higher. Silver is in a third attempt now, let’s see how it will go. The metal has been falling faster than rising and that was the key action recently.
Range players are welcome to the market with tight stops on breaks. Trend followers should wait for clear signals.
Intelligent trades!
Aibek Burabayev
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
Rare Silver and Gold coins are in growing demand
Dear John,
Thank you for sharing!
Best regards, Aibek
Dear Aibek,
Yes your analysis and conclusion both are right, in Silver, Final Bottom Formation or any further down side still remains, and apart from it's movementum or intensity, but Down trend will ahead for quite long period.
Dear Rasesh,
Thanks for your feedback. Let us see how it goes!
Best regards, Aibek
Why do you guys stay so enamored with stuff that is in a major bear market and has been for 5 years now, not to mention obliterating shareholders who were unfortunate to own mining outfit shares and not have a line drawn in the sand to get out when they could?
Don't remember any of you guys encouraging mining company longs to set stops and save capital.
All the graphs and "what should be" set ups in the world don't come anywhere near to the fact that it's still in a bear market... until proven otherwise.
Dear Stephen,
Thank you for feedback.
Mining companies are digging because they need cash and can't stop mjning even at zero profit levels.
Investments are gone down in the mines and they can't throw away spent money.
Best regards, Aibek
Dear Steve:
Major bear markets are usually only apparent in hindsight! Even short time frames are deceiving. In 2008, precious metals shares dropped up to 95% (I know, I had some), but a few months later they strongly rebounded over the next two years to make new all time highs, in many cases doubles of the previous highs (thankfully, I averaged down big in the depths of the crash).
And who knew that printing free money would cause gold etc to crash to previous lows, though the general stock market did the opposite, after dropping 50% by early 2009?
Are the general markets heading into a major bear market beginning a year ago or maybe just a month ago? We may well know 5 years from now.