The strong reversal from the April 2018 high appears impulse looking on a few world stock markets, particularly the FTSE and NIK-225. So we are focussed on the cleaner patterns from the April high. Having put in a 5th wave to end an impulse wave from the April 2018 high a few days back, the subsequent bounce we have seen over the last few days is of no surprise to us, its actually what we want to see, as we are looking for a partial retracement in 3 or 7 waves to offer a bearish setup for a move lower.

The bounce may still see a bit more upside and test the 7300 area (7350 cash market), but as long as the current bounce remains as a 3 or 7 swing rally, and holds below 7474 (7527 cash market) then it can offer traders a setup to move lower. A strong move under 7200 would be the first clue to support a move lower and argue the recent bounce we have seen over the last couple of days has likely ended.

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We are currently tracking a possible impulse wave from the all-time high at 11855, a new low is still needed to end a 5th wave of a suspected impulse wave as shown. Whilst the Banknifty has moved to a new low, we want to see the Nifty confirm that new low on the Banknifty, that would offer a bearish reversal clue.

If we do see a 5th wave to end the current impulse wave idea from the April 2018 high, then a bounce thereafter in 3 waves can be sold against 11855 stops. Based on the wave pattern from the lows made in 2016, the decline from 11855 could be a very important reversal signal, although we are taking it one step at a time.

Short term there are a few ideas we could suggest for wave [iv] such as a flat or triangle, so unless a big move above 11564, then allow for a new low as shown for wave [v]. It’s then it can set up for a partial retracement in 3 waves.

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Is it time to be looking to buy Silver?

Into the Feb 2019 highs, traders had turned very bullish on the metals, understandably so, as the metals had been rallying for a number of months from their respective 2018 lows. Upside targets were being increased from the precious metals Gurus, and traders/investors were buying the short term bullish hype.

However whilst many traders had arrived late to the party, Elliott Wavers should have been cautious about expecting any further upside. Into the Feb 2019 high, we could count 9 swings, that suggested a completed impulse wave, coupled that with the extremely bullish sentiment, gave us a recipe to be cautious about expecting further upside, we felt a pullback was due. A move lower to kick off the late to the party bulls was needed and turn sentiment more bearish.

Fast forward I think there is a strong case to be made that a low is in at $13.65, or can be with a minor new low. Whilst it’s below $14.05 it may still see a minor new low under $13.65 to end wave [c] and complete an ending diagonal (bullish declining wedge).

If a low is actually in place for the preferred idea, then a strong move above $14.05 – 14.10 is needed to further argue for a rally higher. For those that study price action, you may have noticed the momentum over the last few weeks is also slowing up, that’s a good sign to support the current idea of an ending diagonal for wave [c] and complete a larger ABC decline.

Generally speaking, we tend to see strong momentum for wave A, but wave C shows much weaker momentum, that’s a strong characteristic of a Zigzag correction, aka 3 wave corrective move.

Before

After

As the saying goes “love em at the highs, hate em at the lows”. Traders need to decide if the love or hate Silver here.

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The decline from 112.40 appears to be developing an impulse wave, staying below 111.36 favors more weakness, an up-down move is still needed to complete an impulse wave (5 wave decline) from 112.40, that is likely only wave [a] of a larger zigzag decline towards 107.00 as part of a daily triangle we are currently tracking.

A bounce for wave [iv] is expected soon, followed by new lows for wave [v] to end an impulse wave from 112.40. Once it’s completed a 5 wave decline from 112.40, any bounce thereafter in 3 waves, offers readers a sell setup against 112.40 stops. Short term, look for any bounce for wave [iv] to stay below 111.36.

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The decline from Jan – Dec 2018 appears to count as 3 wave decline, the subsequent rally from the Dec 2018 low can currently be counted in 3 waves. Failing on or around current levels followed by a large move below $36.00 can argue that the advance from the Dec 2018 low has likely ended and started a new move lower for wave [Y] of a suspected double zigzag.

If you own housing stocks, it might be prudent to think about some protection or scaling out of positions, or at least watch to see if a big move below $36.00 on ITB is seen. Whilst it’s above $36.00, the trend remains up and no threat to the current uptrend from the Dec 2018 low.

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