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Metals

Silver Reaffirms Reversal, Defines New Bull Risk Levels

Posted 01/30/2019 8:42AM CT | RJO Market Insights

Silver 240 Minute Chart

Overnight’s break above 04-Jan’s 15.955 high reaffirms the major reversal attempt from 14-Nov’s 13.86 low and leaves smaller- and larger-degree lows in its wake at 15.61 and 15.195, respectively, that the market is now required to fail below to threaten or negate a broader bullish count.  These levels represent our new short- and longer-term risk parameters from which a still-advised bullish policy and exposure can be objectively rebased and managed.

Silver Daily Chart

While the past couple months’ recovery is one of this market’s more impressive bullish stints the past 2-1/2-years, these bull risk parameters may come in handy as the market engages a 15.50-to-16.50-area that provided a ton of support from Dec’16 until Jul’18’s breakdown that left this area as a huge resistance candidate.  If there’s a time and place for this rally to run out of steam a relapse, it is here and now.  And we will gauge such a failure, or not, by the market’s ability to sustain recent gains above 15.61 initially and then 15.195.

In lieu of such weakness, our preferred count is a shocking one that still contends the entire Jul’16 – Nov’18 relapse attempt is “only” a (B- or 2nd-Wave) correction of Dec’15 – Jul’16’s initial (A- or 1st-Wave) rally within a major, multi-tear base/correction/reversal environment that warns of a (C- or 3rd-Wave) run at Jul’16’s 21.225 high or above.  Per this count the market would be expected to trade through this $16-handle area in an increasingly obvious, trendy, impulsive manner pretty much straight away.

These issues considered, a bullish policy remains advised with a failure below 15.61 required for shorter-term traders to move to the sidelines and longer-term players to pare bullish exposure to more conservative levels.  Ultimately, commensurately larger-degree weakness below 15.195 is required for long-term bulls to jettison the position altogether.  In lieu of such weakness further and possibly accelerated gains should not surprise.

Silver Weekly Chart

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