Now silver as well. On Friday, about 5 minutes after the announcement of the initial offering price of Alibaba (BABA), silver broke its previous correction low = 18.17$ from June 2013. The question why the Alibaba IPO can influence silver concretely is truly beyond my knowledge and logic, unless both items should have somehow to do something with capital flows and/or China. Alibaba is a Chinese company, and China is a main supplier as well as a main recipient of physical silver.
A few minutes later, at 14:49 h GMT, the 18.00$ mark was reached and broken for the first time since 4 years ago, almost to a day – under high selling pressure. Finally silver closed on Friday and the whole week below the important 18$ handle.
Therewith, deeper and deeper it is dragging itself into the crisis and the world into a deflationary scenario. When it comes to important commoditys, this September’s tragedy simply beggars belief. Both much-noticed precious metals, silver together with gold, started immediately after Labor Day and thereby punctually after the official end of the summer doldrums to break mearly a dozen of important GUNNER24 Magnets – many of them being technically strong supports – on weekly and monthly base within the so far 14 trading days of September. Virtually without considerable resistance, for 14 trading days it has been going downwards only, because the gathered broken magnets make the downtrend accelerate more and more.
Since September 3, the Big Money has been bashing mercilessly onto the precious metals. Unless within the coming 5 trading days, i.e. the next trading week, a white knight appears bringing the sharp turn in the precious metals, much, much lower prices will be in store because in that case the current corrections in gold and silver are likely to extend for at least 9-12 months in the secular bull market.
9 days is the entire remaining time for gold and silver to avoid important monstrous monthly sell signals. Last week, I went in detail into the 950$-1000$ correction target in gold to be worked off in the year 2015. A week ago, I was working on the assumption of more than an 80% likeliness of being reached this area in 2015. With the currently occurred silver downtrend tightening I will have to mark up to a 90% the probability of gold to reach the 950-1000$ in 2015.
Where are the next lower downtargets in silver that will be to be worked off likewise with a probability of a 90% now? At which mark will the downtargets be released respectively avoided yet?
In the current correction that derives from the starting point of the 2008-2011 rally, silver had to work off the 2008 1*2 Gann Angle. The 21 Candle GUNNER24 Up in the monthly time frame clarifies best the derivation of this Gann Angle downtarget. The last time I analyzed this setup was in May 2014. You may read up there in detail the derivation for reaching the downtarget again:
4 monthly candles later, the whole tragedy is looking now as follows:
For September 2014, the important 2008 1*2 Gann Angle takes course at 18.33. The performance of Friday makes optically clear how far silver has diverged from it´s originally bear-market target already. Technically, the 2008 1*2 Gann Angle should have produced/shall produce large rebound energy = support. From this angle, silver should be supposed to bounce up. Because it is being tested for the very first time, it should have to give and transmit support energy.
But it doesn’t seem to – at least not yet. With the Friday close, silver traded below the 2008 1*2 Gann Angle for the very first day. It has still got 9 days to recover itself closing above the 2008 1*2 Gann Angle. If silver closes significantly below the 2008 1*2 Gann Angle = below 18.20 in September, automatically a next lower important Gann Angle will be activated as downtarget. In this case, this is narrowly above the 15$ mark at 15.25. Above in the chart I named it "2008 Support Angle". If the 2008 1*2 Gann Angle breaks finally in September, this sign would trigger such a number of strong down forces, that the 2008 Support Angle will be worked off as early as in October 2014!, but at the latest in December 2014. That means again more than a 14% down in the possible next thrust.
Till next Friday, the 18.33 will have to be re-conquered. For, according to the body of rules, maximally 4 daily closings below such an important monthly magnet should be enough to take it finally. The big question being supposed to be answered till Tuesday is whether the previous correction low having been fallen below at 18.17 is a fake or not. Was it on purpose of the Big Money to break through the 3 year lows releasing the stop losses of the weak hands and collecting strongly below the 18$ mark or not??
If now the Big Money loads the boat below the 18$ mark – the relatively high Friday volume is thoroughly pointing to that – adding longs below the 18$ mark is likely to go on till Tuesday. Then, starting sometime from next Tuesday, it will go up rapidly in order to re-conquer at first the 18.17 and until Friday the 18.33. If then the 18.33 are defended in September 2014 that will have been all for this year tending silver (together with gold) rather sideways to slightly upwards till December 2014/January 2015 before important dams will be likely to break finally!
If the Big Money does not join until Tuesday, tending to continue the downtrend, for all the next 5 trading days silver will not be able to close above the 18.17 mark and September not above the 18.33. Thus, the downtrend would have to keep on accelerating increasingly being on the agenda 15.25 as next important downtarget. This scenario has clearly got the better chances. Some important indicators (Stochastic, MACD, RSI, Momentum) in the monthly time frame have still space downwards prognosticating weakness for at least half a year. Bollinger Bands are signaling that an important next low should/might be situated at 15$.
Let us have a look now to downtrend of the last 3 years. At the all-time high, we can recognize a 3 month down initial impulse (Blue Arc measurement) whose support and resistance forecast makes seem for sure at almost a 100% a double sell candle on monthly base for the current September. – This again activates the 15.25 area as the next short- respective medium-term downtarget:
This 3 Candle GUNNER24 Down Setup is clearly signaling that falling below the previous correction lows is likely no fake but would have to/should be another lasting sell signal thereby silver technically not being savable any longer!
In this context, please have a look at first to the upper line of the first double arc and the big green oval. That’s where altogether 6 important monthly lows were produced in 2011-2012. We realize partly very long lower wicks there, at the corresponding candles. That means buying interest at the upper line of the first! The upper line of the first stopped the decline well = strong support, always developing nice upwards energy at the respective monthly lows.
Mathematically, the upper line of the 2nd is linked with the upper line of the first double arc and should usually perform in the same way like the upper line of 1st. But it doesn’t perform at all the way the upper line of the 1st does. The rebound = bounce energy and the very first test of the upper line of the 2nd in May 2014 + June 2014 was shaped weakly already. Look how low the current September candle is trading now below the usually strong upper line support of the 2nd. The upper line of the 2nd is at 18.95 for September 2014.
There’s no salvation/chance for silver any more during the last 9 September trading days re-conquering the upper line of 2nd I suppose. Where should the white knight come from?? Why should the Big Money change the sides now? Geopolitically, everything is easing up at the moment!! So the upper line of the 2nd can´t be held/defended for this month, I fear. That would mean a clear sell signal on monthly base. Thus, the lower line of the 2nd is technically activated finally already as the next important downtarget!
I even suppose that the break of the 18.95 has released powerful downwards energy, that the now first test of the 2008 1*2 Support Angle is looking that negatively. And that one – standing till Friday – doesn’t make any move to stop at all, let alone – standing till Friday – even give the least indication of silver being willing to rebound.
At 16.95 a next strong GUNNER24 Horizontal Support resides. Close to 16.95 and/or at 17.00$ environment current downtrend might/could stop and silver might turn upwards there for a bounce in downtrend if the 18.33 will not be re-conquered next 5 trading days.
The conclusion stated above – a monthly close in September 2014 below the 2008 1*2 Support Angle at 18.33 would activate the 15.25 support area – is thereby reinforced and strengthened. Not only the lower line of the 2nd double arc is at the 15.25 area from October to December 2014, but also the 2008 Support Angle intersects the lower line of the 2nd there. So, at 15.25 we can identify the very strongest down magnet below the current level! Thereby, this region will have the strongest attraction force for the market… if the 18.33 falls finally on monthly closing base.
A monthly close below 15$ during the next 12 months will activate the 2008 low surroundings as the next downtarget = 9$-10$.