Most of this week, the markets remained under pressure. When news came out that there would be a healthcare vote on Thursday – the market attempted to rally but resistance pushed it back down.
Of course, one should take note what happened last time with the Brexit vote on around June 23, 2016 — the markets rallied after the close by a substantial amount into the vote – but then sold off in historic fashion.
I don’t think that will happen this time – but something to keep in mind.
Meanwhile silver has had some 15 straight days down – I lost count — and it looks like it is now consolidating and forming an A-B mountain consolidation pattern – same with Gold. The miners actually started to rally – so we have some initial clues that the metals are bottoming around here.
I was expecting one more low – but we basically held that support region and spend most of the day building a support line.
In the previous chart – we pointed a potential 1-2 pattern – though the size of the wave 2 drop is large enough that one should not reasonably expect an immediate rally without another drop.
So what happened was we got the b-wave overnight drop back to the 2179 ES lows – before the i-ii pattern formed during the day.
Our timing on the Russell trade was a bit off – but since recognizing the A-B-1-2-3-4-5 pattern, expecting at least the c-wave to play out to 1402.
However, the consolidation pattern does appear to be stopping the bleeding.
The 8:30 am report this morning did not trigger a new low or a rally, but staying in this region is a sign of potential reversal.
As long as silver stays in this 16.3 region through the weekend, this should set up a cross jump over the pink line to finally reverse this massive selloff in silver.
Of course, there’s event risk with the French election over the weekend, but once this pink trendline gets taken out – I would expect the following day to fall back down into the pink trendline before it continues up.
On the daily chart, we have what could be considered a wave 2 drop.
The ideal place for wave two would have been 16.9 — but we are at 16.3 — so it has gone substantially lower than what is typical for this wav3e pattern. That said, the pattern is still technically valid over 15.9.
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