Posted on Oct 02, 2023, 08:03 by Dave Toth
With the gold market demolishing its past three months’ support last week in what has thus far become a $120 meltdown within its massive 3-YEAR lateral range, it was only a matter of time before the silver market followed suit. The daily chart below shows overnight’s continuation of Fri’s plunge that has now broken its 3-month support around the lower-22-handle, reinstating this year’s major reversal that began with 11-May’s bearish divergence in momentum we discussed in that day’s Technical Webcast. Today’s clear break to new lows for what is now a 5-MONTH downtrend leaves 22-Sep’s 24.05 high in its wake as the larger-degree corrective high and level this market must now recoup to arguably complete a major corrective sell-off attempt and resurrect a longer-term bullish count. Until/unless such strength is proven, the trend is down on all practical scales and should be expected to continue with now-former lower-22-handle-area support considered key new resistance ahead of further losses.
On a much longer-term basis, the weekly chart below shows this year’s reversal lower but well within the middle-half bowels of its massive, incessant lateral 3-YEAR range where we maintain greater odds of aimless whipsaw risk that warrants a more conservative approach to directional risk assumption. But until/unless this clear and present intra-range downtrend is arrested by a countering bullish divergence in momentum somewhere along the line, the bear’s downside potential could easily be the LOWER-quarter of this range into or below the $19-handle.
On a short-term basis, Fri’s intra-range volatility and subsequent meltdown is somewhat prohibitive in identifying a practical smaller-degree corrective high. However, we’re identifying what was a 23.285 smaller-degree corrective high CLOSE (not discernible) in the 240-min high-low chart below as our new short-term bear risk parameter. Given the extent and behavior of the past couple days’ resumption of a 5-MONTH downtrend, we strongly suspect this market will AT LEAST provide a smaller-degree corrective hiccup somewhere along the line ahead of still further losses before even the potential for a countering bullish divergence in momentum develops. Following such behavior, we’ll be able to then objectively trail a short-term bear risk parameter to the high of that smaller-degree corrective hiccup.