MAY SILVER
We introduced the prospect for a developing top in Fri’s Technical Blog following that day’s micro mo failure below 15.48, but required a bit more weakness below 08-Apr’ 15.11 corrective low to really confirm 14-Apr’s 16.30 high as the end of at least the rally from 01-Apr’s 13.895 low. The 240-min chart below shows this confirmed weakness that leaves yesterday’s 15.69 high and last week’s 16.30 high in its wake as the latest corrective high and risk parameters from which non-bullish decisions like long-covers and cautious bearish punts can now be objectively based and managed.
01-Apr’s next larger-degree corrective low at 13.895 remains intact however as the key risk parameter the market needs to break to break the uptrend from 18-Mar’s 11.64 low and possibly re-expose the secular bear trend.
From a long-term perspective and given recent insane volatility, traders are advised to toggle cautious directional biases and exposure around 01-Apr’s 13.895 flexion point. On the one hand, a relapse below 13.895 might define Mar-Apr’s recovery attempt as a 3-wave and thus corrective affair that would re-expose the secular bear trend to new lows below 11.64. On the other hand, the market’s gross failure, thus far at least, to sustain Mar’s break below a TON of former support around the $13/$14-area cannot be ignored as part of a much broader BASE/reversal process. And with a growing risk, we believe, that the equity market’s may be rolling over again and with interest rates so low, there aren’t many alternative to metals (even lowly silver) as a safe haven to temporarily park money.
These issues considered, shorter-term traders have been advised to neutralize bullish exposure and are further advised to first approach recovery attempts towards the 15.00-area as corrective selling opportunities with a recovery above 15.69 required to negate this specific call and warrant its cover. In lieu of such 15.69+ strength, further and possibly steep losses straight away should not surprise. Longer-term players are advised to pare bullish exposure to more conservative levels and jettison remaining exposure altogether on a failure below 13.895.
JUN GOLD
For most intents and circumstances, the technical construct in gold is identical to those discussed above in silver. Today’s continued slide below 08-Apr’s 1670.7 corrective low and short-term risk parameter stems at least the uptrend from 01-Apr’s 1576 low and leaves corrective highs in its wake at 1718.4 and 1788.8 as our new micro- and short-term risk parameters from which non-bullish decisions like long-covers and cautious bearish punts can be objectively based and managed.
From a longer-term perspective however, commensurately larger-degree weakness below 01-Apr’s 1576 larger-degree corrective low remains required to, in fact, break the uptrend from even 16-Mar’s 1450.9 low, let alone the secular bull trend. Per such, this 1576 level remains intact as our key long-term risk parameter. And again, if stocks roll over here around the key technical condition and area we’ve described, and with Treasury rates getting pressured again, gold is a likely candidate for a safe haven.
In sum, shorter-term traders have been advised to neutralize bullish exposure and are OK to consider cautious bearish exposure with a recovery above 1718.4 required to reverse this call. Longer-term players are OK to pare bullish exposure to more conservative levels and to require commensurately larger-degree weakness below 1576 to neutralize remaining exposure.
MAY COPPER
Overnight’s failure below 15-Apr’s 2.2770 corrective low and short-term risk parameter updated in yesterday’s Technical Blog confirms the bearish divergence in momentum we feared and defines Fri’s 2.3580 high as the end of the recovery from 19-Mar’s 1.9725 low. Given the prospect that this recovery is only a 3-wave affair and also given the backdrop of the secular bear trend, a resumption of that bear to new lows below 1.97925 should not surprise. Per such, Fri’s 2.3580 high is considered a short-term but pivotal risk parameter from which traders can rebase and manage the risk of a resumed bearish policy.
If this count is correct, downside behavior could be swift, decisive and steep straight away. These issues considered, a bearish policy remains advised for long-term players with a recovery above 2.3580 required to pare or neutralize exposure. Shorter-term traders are advised to first approach rebound attempts to the 2.2350-area as corrective selling opportunities with a recovery above 2.3580 negating this call and warranting its cover. In lieu of such strength, further and possibly protracted losses straight away are expected.
