Bottom in Silver?

July 9, 2018 8:01AM CDT

Overnight's recovery above both 04-Jul's 16.195 initial counter-trend high and our 16.22 short-term risk parameter discussed in 03-Jul's Technical Blog has confirmed a bullish divergence in momentum that defines 02-Jul's 15.80 low as the END of the decline from 14-Jul's 17.35 high and possibly the end of a monstrous, multi-quarter correction that could present an outstanding risk/reward buying opportunity for the long haul. In this regard that 15.80 low serves as our new short-term risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed. On an even tighter scale, Thur's 15.97 serves as a micro risk parameter from which scalpers can base cautious bullish exposure. Former 16.19-area resistance is considered new near-term support.
Silver 240-Min Continuation Chart
Silver Daily Continuation Chart

While this bullish divergence in daily momentum (above) is of a relatively small scale, the fact that it stems from the market's break below a TON of former support-turned-resistance around the 16.13-to-16.07-area could speak volumes down the road. Indeed, this 16.13-to-16.07-area supported this market for 4-1/2-MONTHS before late-Jun's break below it left it as a hugely important new resistance candidate and gave the bear every chance in the world to "perform". Thus far, as a result of today's bullish divergence in mo above 16.22, the bear has failed a golden opportunity to perform.

This lack f bear performance, AGAIN, at the extreme lower recesses of the past YEAR-AND-A-HALF'S mere lateral range remains consistent with our very long-term BULLISH count that contends the price action down from Jul'16's 21.225 high is a (B- or 2nd-Wave) correction within a multi-year BASE/reversal process that warns of an eventual resumption of early-2016's rally to eventual new highs above 21.225. Last week's return to a 35% reading in the Bullish Consensus ( measure of market sentiment that has warned of and accompanied EVERY significant intra-range rebound over the past year-and-a-half would seem to reinforce at least another interim bullish count with, again, a relapse below at least 15.97 and preferably 15.80 required to threaten and then negate this call.
Silver Weekly Continuation Chart

Finally, from an even longer-term perspective, we would remind traders of the extent and impulsiveness of the Dec'15-to-Jul'16 rally that still defines that 2015 low at 13.62 as the END of the secular bear market from Ar'11's 49.82 all-time high and start of a major base/correction/reversal process that warns of eventual (C- or 3rd-Wave) resumption of early-16's initial (A- or 1st-Wave) counter-trend rally to 21.225+ levels. To even threaten this call all the bear has to do is break below at least Jul'17's 15.145 low. Today's admittedly short-term strength provides an early warning of another deferral or threat to any bearish count and reinforcing evidence to a bullish one.

Of course, today's admittedly short-term strength precludes concluding a major move high. But until and unless this market relapse below 15.80, the prospect of what would be looked back on as a shocking move higher is in place. Per such, traders are advised to move to a cautious bullish policy and first approach setback attempts to 16.195 as corrective buying opportunities with protective sell-stops at 15.965 and/or 15.799 commensurate with one's personal risk profile.

Silver Monthly Continuation Chart

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