Silver And Gold Technical Analysis Adam Smith Associates

Silver prices show an oversold RSI indicator as we have retraced 61.8% of wave 1 so far. However the wave structure for wave 2 down is that of an expanded flat and in that wave c of 2 down has to complete 5 waves. We are in minor wave iii and so a small wave iv bounce and one more dip are needed. 78.6% retracement at 16.30 therefore is the next major support if prices fall in wave v as expected. Only then can we call it a day here. In fact silver is the main reason that the precious metals got pulled down. At the recent high Silver CFTC longs were reported at a record long position. So with everyone long there was need for some unwinding. The longs show the strong positive mood that should come back and drive each rally higher.

While I discussed my Long term stance on Gold, as of last week I have been expecting lower prices in what is still a wave 2 of 3 correction. The next move higher did not unfold. While one reason for this for Silver getting Long in the tooth with a record long position, gold did not see positions at this extreme. However at the recent high EWI did report the Daily Sentiment index to have reached 90% [marked in blue]. The reading was higher than the one at two previous tops also shown in blue on the chart. So people got too bullish and we are getting a correction. Now while my expanded flat target is at 1190 odd near a 61.8% retracement, the last correction did go to 78.6%, and so we should keep that level in mind just in case. It is near 1162. At 1165 I have a trendline of the lows from the 2015 Dec bottom. In fact the entire visual of 2015-2017 would end up looking like a triangle at the lows. Based on this I anticipate that prices dip and bottom into June [maybe the Fed June meeting], and then rally into the year end as shown in pink. Now Dec is an important seasonal period that has marked many tops and bottoms as has the Mar-Apr zone. So I have placed vertical lines into Dec for many years and you can see the number of bottoms that have formed recently. Still I anticipate that this time round if we start wave 3/3 we may see the highs in Dec rather than a low

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