3 Views on Silver
- Posted by Greg Harmon
- on June 7th, 2012
The 3 box reversal Point and Figure chart above is a good starting point. Clean and objective it suggests a bullish move with a Price Objective of 58.00. A print with a 30 handle will start the new row of X’s. But this gives no guidance in terms of timing. So lets move on to the Elliott Wave chart below. I have put this chart out before and you can see that it came very close to negating the count before printing a 2 with a near full retrace of the 1 move higher. A reasonable target for wave 3 would be between 38.16 and 45.22, 100-161.8% of the wave 1 move higher. Assuming a 50% pullback in wave 4 brings it at the high end to 35.97 and the low end 32.44. The range for wave 5 then caps it higher to 54.46 in the higher track and 43.87 in the lower track. The high estimate is very close to the Point and Figure estimate but suggest that it may take a long time to get there. Wave 5 can be estimated as comparable to the 15 month moves of wave 1 and 3, and that would
place it at the end of March 2013. With a corrective wave following and then another move higher it could be 2015 before 58 is achieved. Of course it could happen much quicker as well if wave 3 ends up as a multiple of wave 1. The Fibonacci view is a lot more mixed. The chart below shows it bouncing along the 50% retracement of the move higher, unwilling to drop much below it, and not able to push back above a retest of the 38.2% Fibonacci level. Perhaps that was because the Fan line knocked it back. With the new move higher as it walked through the Arc, that 38.2% level at 34 becomes the first upside target and a move over that a retest of the 23.6% Fibonacci at 40.04. The Arc suggests those could happen as soon as July and August. With the Fan line around 42 then, it would be a logical spot for the wave 3 action to end and consolidation to begin in a flatter wave 4 before the final push higher in wave 5. Of course on a move below 26.20 and you can throw this post away.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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