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Silver Resumes Bear Trend, Defines New Key Risk Level

Posted 06/28/2018 7:24AM CT | RJO Market Insights

This week’s relapse below last Fri’s 16.18 low in the now-prompt Sep silver contract nullifies the bullish divergence in short-term mo discussed in last Fri’s Technical Blog and reinstates the current downtrend from 14-Jun’s 17.35 high. The 240-min chart below shows the important by-product of this resumed weakness being the market’s definition of Mon’s 16.485 high as the latest smaller-degree corrective high and new short-term risk parameter this market is now minimally required to recoup to threaten the bear and expose another base/reversal-threat condition.
Silver 240Min Chart

Silver Daily Continuation Chart
This tight but objective short-term risk parameter at 16.485 may come in handy given the market’s multiple rejections of the lower-quarter of the past year-and-a-half’s range shown in the weekly log chart below. We continue to maintain on this very long-term basis that the past 18 months’ languishing price action is that of a huge “rounding-bottom” reversal pattern and B- or 2nd-Wave correction of Dec’15 – Jul’16’s initial (A- or 1st-Wave) rally from 13.62 to 21.225 ahead of an eventual (C- or 3rd-Wave) resumption of that uptrend to new highs above 21.225.

For the time being however, given this week’s break below the past 4-1/2-months’ support around 16.13 shown in the daily chart above, the onus is on the bull to recover above at least 16.485 needed to threaten a more immediate bearish count. Until such minimum strength is proven, we cannot ignore this week’s break below tons of support as that of a more protracted, event relentless resumption of a broader bearish count.

In sum, the bear has created its opportunity to perform by breaking a ton of support around the 16.13-area. If our long-term base/reversal count is wrong, the bear now has the opportunity to prove it by not only sustaining losses below at least 16.486, but by BEHAVING LIKE A BEAR with more obvious, trendy, impulsive price action lower. Per such, a bearish policy remains advised for long-term players with strength above 16.485 required to pare exposure to more conservative levels. Shorter-term traders whipsawed out of bearish exposure following last week’s bullish divergence in short-term mo are advised to reconsider cautious bearish exposure from 16.20 OB with a recovery above 16.485 required to negate this call and warrant its cover. In lieu of such 16.485+ strength, further and possibly steep losses should not surprise straight away.

Silver Weekly Continuation Chart

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