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Trail S-T Silver Bear Risk to $15.58

Posted 07/24/2018 7:16AM CT | RJO Market Insights

We won’t be able to conclude a more significant base/reversal threat by proof of smaller-degree strength above yesterday’s 15.58 high. Indeed, at that point the market would still be only around a Fibonacci minimum 38.2% retrace of just Jul’s 16.26 – 15.185-portion of the broader bear trend. But for a number of reasons we’ll discuss below, shorter-term traders with tighter risk profiles are advised to trail protective buy-stops on advised bearish exposure to levels just above that 15.58 high that we’re now considering our short-term risk parameter.

What we WILL be able to conclude from a poke above 15.58 is the intermediate-term trend as up as such strength will, in fact, leave 19-Jul’s 15.185 low intact as one of developing importance and also a corrective retest of that low (currently 15.34) as levels from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed. What heights exist above 15.58 at that point would be anybody’s guess.
Silver 240-Min Continuation Chart
Silver Daily Continuation Chart

Our concern about the market’s upside potential following even a relatively smaller-degree bullish divergence in momentum above 15.58 stem from the following facts:

• that bullish divergence in mo from
• the extreme lower recesses of the past year-and-a-half’s range shown in the weekly log chart below amidst
• historically bearish levels in the Bullish Consensus measure of market sentiment and
• the Fibonacci progression fact that the decline from 14-Jun’s 17.35 high is exactly 38.2% longer than Jan-Feb’s preceding 17.705 – 16.13 decline shown in the daily chart above.
Silver Weekly Continuation Chart

There’s also even the much longer-term base/reversal-threat issue shown in the monthly log scale chart below that contends that the extent and impulsiveness of early-2016’s rally from 13.62 to 21.225 BROKE the secular bear trend from 2011’s 49.82 all-time high and STARTED a major, multi-year correction or reversal higher. Against this base/reversal-threat backdrop the relapse attempt from Jul’16’s 21.225 high is considered a (B- or 2nd-Wave) correction ahead of an eventual (C- or 3rd-Wave) resumption of 2016’s rally to eventual new highs above 21.225.

Given the lateral-to-lower bludgeoning this market has incurred for two full years now, we understand traders’ lament over this long-term bullish count. But until and unless the market breaks Dec’15’s 13.62 low, eliminating such a bullish count from contention would be an emotional decision, not an objective one. And indeed, commensurately larger-degree proof of strength above 09-Jul’s 16.26 high and our long-term risk parameter remains minimally required to break Jun-Jul’s downtrend and resurrect/reinforce such a longer-term bullish prospect.

These issues considered, a bearish policy and exposure remain advised with a recovery above 15.58 required for shorter-term traders with tighter risk profiles to neutralize bearish exposure and circumvent the heights unknown of a correction or reversal higher that could surprise in scope. Commensurately larger-degree strength above 16.26 remains required for longer-term players to take similar defensive steps before reversing to a bullish policy. In lieu of such strength further losses remain expected.

Silver Monthly Continuation Chart

RJO Market Insights

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