Silver saw a steep drop from $50 to $32 in the month of May and the rise post that has been in a corrective fashion.
Silver - rising wedge
The above chart of silver shows a rising wedge pattern with a typical throw-over to the upside. Yesterday's close was well below the bottom of the rising wedge and this should usher in a sharp down move for the industrial metal probably before the end of this month. Looking at the chart from an Elliott wave perspective, silver is probably in its powerful 3rd wave or C wave which has the characteristics of wave 3. At $26.7 the first leg of the decline from 50 would be equal to the move from 44.27 (and hence A=C), the August peak, which seems like the minimum drop that is likely for silver. Also the $26 zone is the previous 4th for Silver.
Naturally, some of us would be thinking, "what happens to gold now?"
Gold Daily Chart - Potential for a double top
Here too, it is obvious that Gold is running into troubled waters. A fake print above 1913 high, momentum disagreeing with the new high in price are all tell-tale signs of exhaustion. A close below 1763 or an intraday drop below 1705 would complete a double top for gold and should draw prices at the very least to 1480.
Given the fact that the Dollar Index too had a breakout to the upside just a few days ago, you might want to pay considerable attention to these signals in the precious metals space.
96 Responses to “No silver lining for silver”
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Dear Jai
I just have a small doubt, you have been predicting a fall in equity markets and gold and equity have a inverse relationship… if the gold starts falling the way the charts are suggesting, then don’t you think that equity will also start rallying as opposed to what is being suggested by the charts.
Need your views on that
Hi Prateek,
Initially equities get a little bit of flow and then all risk assets fall in tandem. Infact, the stage where all the risk assets start to fall together will be more severe than the earlier phase. Recall from 08, Gold peaked in March, equities peaked in Jan, after May all of them fell together.
Good trading to you,
Jai
Hi Jai,
What do you think about today’s move in Nifty? As per the charts posted by you, do u think wave 5 of Longer Wave 3 is in progress now and we shouldn’t touch 5200 again for the near term and drift to at least a retest of 4700?
Your views would be of great help
Regards
Rishabh
Hi Rishabh,
4 could still be in progresss, that’s what the orange scenario is all about. Please re-visit last post on Nifty and recall the discussion in comments section.
Regards,
Jai
Thanks Jai.
Cheers
Rishabh
Hi Jai
You said about gold reaching $1480.Could you spell out the timeframe and is it good to buy from there for longer prospects.
Regards
rameez.
Hi Rameez,
Let it first close below 1767 or break 1705. Spelling out a scenario does not mean it is a certain event. When it does happen the move down should be quick say not more than 3-4 weeks.
All the best,
Jai
Jai, You mentioned on television today that you could see an upside level of 5220, I felt that above 5155 it can rally to 5350-5400 levels considering that nifty has formed an inverse head and shoulder pattern and Friday high of 5155 was very close to the neckline of the pattern.Am I right or am I seeing it wrong?
Newton,
Max upside inside the region of 5220 and less than 5330. That is not the same as it WILL or MUST come there. To me that is not a clean H&S pattern, I know some would like to see it as one.
Best regards,
Jai
Jai,
Any thoughts on the Spice Jet stock ? It might be air to say all Airlines are close to bankruptcy, but Spice Jet is different.
Regards
Rut,
Very weak charts but could be on to some good counter-trend move. Strenght abv 27, may be will rally upto 36. I will stay away till I see clear signs of base formation.
Thank you Jai !
Hi Jai,
If convenient, for all fellow readers/followers of your views/blog, could you a please elaborate a bit on “H&S” pattern in Nifty and why is it not clean to you. Also, please don’t get me wrong…..I just want to understand your perspective (which I respect).
Regards
Rishabh
Hi,
Between 5220 and 5330 would be trying to fill the gap?
Cheers.
hello sir
from when are you planning to start the advisory
Jai,
u r stunning. I remember the day when u predicted the crash in the global markets a month back and within 24 hours the markets tanked.
Again now your prediction on the currency was superb. The dollar and rupee breakout has happened as soon as you confirmed. To top it the equity markets are about the same plus no real FII pull out.
Superb read of the technicals and also a great example of how techniclas lead fundamental in most situations.
Without trying to be technical myself, I see that the Nifty has not been able to take out 5177 ( three times) in the last 2 days. Is this a sign that the down trend has started again.
Also, do you think IT has run its course ? Any stocks with a relatively cleat chart pattern that you can recommend.
Regards
Thanks for the generous words. My reading is that TCS has to do 825-690. CNX IT has to go to 4800. How you would trade it is your own headache 😉
I know a couple of close friends who are also short in silver and gold in MCX while the $ price has moved in their favour, the Rupee priced silver and gold are virtually at break-even. I do not have MCX charts – so not able to comment much.
All the best,
Jai
Jai,
On another note, While ur call on Gold and Silver is pending. The currency movement means viryually no difference to the Indian rate on Gold and Silver.
How do you see that play out ?
I have been short on Silver for the last 3 days( from 63500 )
Regards
Thanks. Having a Migrane due to Silver
Regards
hello sir
as per your analysis dollar rupee at 49 near to 50.always respect for your analysis
Hi Jai,
gold @1761$..have been waiting 4 close below 1763 as per ur reco. but now in a state of what to do bcoz of a break in direct correlation between $ price and MCX pix..more worried to go ahead with it since the tgts what u have given for $/rupee r may b 52 -56..can u suggests how we can play this short trade with this issue of $ /rupee equation..
thanks..
Hi Rajesh,
If you had been long USDINR, this would not matter at a net level. I do not know if options exist in MCX for Gold and Silver. Consider that a good route if it exists. Remember I have no clue about what is liquid and what is not. It is all your discretion if options do exist.
All the best,
Jai.
Hi Jai……
Cheers to you…..great analysis…..ALL your calls have gone correct…..be it:
– Currency & Dollar index
– Nifty
And, on stock analysis:
– Reliance
– REC
– JP Associates
Bingo……
Welll………to be candid, I have really benefited from your analysis……….have been strictly going as per your guidances (made loss whenever tried to digress)…..
Don’t know how to thank you……only one request……please keep updating your blog….its a boon and the only REAL guidance for us………
Thanks a ton (want to send you a pack of mithai)……….regardless, have a treat from our side…….
Would eagerly await your further guidance……does the trend change in the shorter term? Or, the course would be as per your earlier analysis?
Have a great day…..and do have the treat from our side…..
Hi Ajay,
Thank you very much for that. Appreciate the thought behind your words. I’m mostly a realist – I know I’m more often right than wrong but Ive been wrong at times.
Best regards,
Jai
Pulling my hair for not being long on USDINR..nevertheless a super call is a super call whether u acted on it or not..had participated in ur poll and waiting to see ur offer product..
Regds,
Hi Jai,
Looking at today’s fall, guess two scenarios are possible:
a) Range of 4900-5200 is maintained and we see a counter move tomorrow
b) Range breaks down and 4700 (atleast is retested)
In your opinion, whats the more probable scenario?
Also, how do u treat intraday (not close) breach of important support/resistance levels
Your views, as always, will be of great help.
Regards
Rishabh
Loved the line on the soapbox “Yes, I said 58, and no, that’s not a mistake. USD/INR goes to 58”
Great job – you are probably the best TA guy out there! It’s a privilege to have access to your views.
Thanks!
Thanks theo.
Hi jai,
New to ur blog. Astonished, speachless. Great ta keep posting. 5177 is too strong to pierce.
Thank u Ravi.
Trading guides/rules :-
1) Dont try to look for support in bear markets, as in bear market there is no support.
2) In bear market you can only and I repeat once again “ONLY” have two stand :-\
a) Short
b) Cash
3) Bear/bull markets dont end when everyone wants , i.e it ends when it has caused maximum pain to majority of people.
4) The sure shot signs for trend reversal is acceptance of the trend by majority of people, in between the two ends, its just lottery game that is being played by people.
The above are some of the guidelines/rules that I follow in trading, rest everything else is just noise.
🙂
Nice going Vikas. Hope its printed and pinned on your trading desk
hi jai ji,
today niftys fall just halted at 4900. retest of 4700 looks very much possible. with US markets falling over 3 % now 4700 should come in no time….. on the weekly charts nifty broke bearish head and shoulder formation which gives downside target of 4300 ….. nifty took 78 weeks to form the h & s pattern. what is the time target to reach 4300 if there is any such study………….. also please suggest a good book to study time wise correction targets…………..
regards
ananth madhav
hi jai ji ,
gold on nymex is almost ready to confirm a double top ,, normally mcx gold also follows nymex gold… but now the joker in the pack seems to be dollar…….. how does one trade indian gold mcx in such a scenario
and at what rupee level the correlation between indian mcx gold and rupee break….?????
and please one more book on intermarket relationships ,,, i already studied john murphy on the subject
hi jai ji
i am waiting for ur reply …………. on the books to be followed for time targets and intermarket relationships..
Hi Ananth,
I have not read Murphy’s intermarket book. So I do not have one to recommend. There is one book by an English bloke – its called Super timing – it was recommended by my friends in STA, UK. I havent read but you check it out and tell me.
Best regards,
Jai
thanks jai ji ……………… a senior technical analyst acting like a friend and guide ……….. man this was what i am looking for……….. i think your blog is god sent……………… i pray to god to give you long life and health…….. the book you have mentioned is by walker and wilson ,.,.. i have just downloaded it.. surely i will share the nuggets in the book with u……..
regards
hello
sir gold and silver near to your recommended levels whats now.hope more downside expected by you
Hi Jai,
Dunno if you missed my post above(because of a deluge of following posts). If possible, kindly reply to the same.
Regards
Rishabh
Hi Rishabh,
Yes, sorry missed your question. The market eliminated one option – so you know it 🙂
Hi Jai
Excellent call on nifty and dollar .Thanks to you i could offload some positions .What is your view on gold having breached $1700 levels.could i go short at these levels as you said it could go to atleast 1480 levels or is it risky as gold always tends to go up due to its safe nature? Your views are highly appreciated.
Andrew,
Gold- that is the general intention 🙂 I cannot say anything more. I always trade with a stop loss above an important support or resistance and go short or long.
Jai,
Its not pinned on my desk, because it can get moved/changed, so I thought its better to get it pinned in the mind 🙂
Can you tell/guide on below data :-
1) As far as I know, when a strong move happens which is completely opposite to what majority of people expect, and are not ready for, the move a sure shot trend changing move (long term), and hence on this assumption, if you look at INRUSD, the move has been on the above logic,
So, as you had assumed the levels of 57 and 65 in future based on this move, do you still feel that the levels are possible and after this move to 50, its even more possible now then before.
2) Can we assume the current state of the Indian markets (Nifty) some what similiar to 1992-2003 period but with much smaller time duration, i.e after highs of 6300 twice , it might fall 3300-3700 and do some time maybe till 2014, and then we might have a mother of Bull run after that like 2003-08 period??
Sorry for such a long post 😛
Vikas,
1) Spot on. When I put out my note on USDINR majority call apparently was 35-37 in the long term :D. Do you think I would change my call now? Just check the comments on moneycontrol.com from some head of forex strategy or treasury desk of many firms – they are all talking about sub 47 in 3 months, low 40’s long term etc. We need more on the wrong side – money flows from majority to minority. BTW, ur comment editing has been done.
2)Right again. After this collapse, a huge bull run is waiting – most likely bigger than 03-08; definitely a new all time high. But until that time, follow the trend or keep cash.
sorry for mistakes on the above post :-
1) “and are not ready for”
Would love to have edit option 🙂
Hi Jai
If 4806 breaks, its only test of 4720 or more. If its more, then next halt is 4660 or 4572 or 4340. Ur guidance pl.
Regards,
Ravi
Hi Ravi,
I understand why you are asking. It makes sense to know these from an extreme short term perspective. I think the next pause will be at 4500’s or 4200 when 4720 is broken. I normally like to trade the big moves and to keep positions open and let profits run until I see a reversal. Does that make sense?
All the best,
Jai
Thanks Jai,
Looking at ur ever increasing number of followers, Guess U need an assistant 🙂
Should I send my CV ? 🙂 My remuneration – U teach me ur style of TA 🙂
Cheers
Rishabh
Rishabh,
😀 I will not need a cv, ill probably keep a short quiz and short list.
Hi Jai,
I am game 🙂
Cheers
Rishabh
Hi Jai,
Just watching Silver on Comex . I have been reading you for few months now . Couldn’t help posting a comment. You not only saved my shirt but helped me ride the C- wave down .Great call on Silver. It’s trading at $32.28 .Are you expecting $26 now ?.
Thanks,
Martin
Hi Martin,
Thank you. Yes I’m expecting $26 atleast. If its wave 3 it could get even lower.
Cheers,
Jai
Hi Jai,
In today’s interview with Udhayan, did you get to hear Udhayan’s tone when he said “You have a good weekend Jai (after your Rupee target and TCS target)”. I’m juz waiting to watch the forthcoming interviews with you in CNBC. 😉
Cheers
Thanks Jai
I was just following price movements and do trade earlier. After t lifetime opportunity of visiting ur blog migrating 2 trend follng. Pl. do keep guiding us.
Reg
Ravi
hai
one word i can say …i love you…no words to speak..
during crash which stock can i pick,for the time frame of 6 month to 1 year..
Hi Sara,
Welcome 🙂 Once the down draft is finished, you would be spoilt for choice. But the important thing now is to be patient and preserve capital. You can clean the whole shop during the rock bottom sale (stocks) if you did that.
All the best,
Jai
sir i am also waiting for your company
hello sir please post the links of your videos thank you.so that we all can watch
Hi Zubair,
http://www.moneycontrol.com/tv/display_show.php?prg=closingbell&dt=2011-09-24 click part 2 and check it out.
Hi,
jai lkg at your unbelievable performance all these words like earmings,boook value ,p/e,mkt cap etc.r suddenly lkg like of what use ..you said more often than not you r on right side of trade and frm the time i have been following this block yet to see u going wrong on a big calls..our best wishes that you continue to enjoy this kind of dream run forever..with countless people lkg at the same charts and following same theory(EW) you have managed to seperate yourself frm consensus with impecable accuracy and timing..
coming to your precious metal call can you clarify this bearish view to be a long term one or just a intermediate top ..i mean wld it make sense to even let go long term investments in it or just short in fut and wait 4 ur tgts to come..disclosure, i did go short in gold on mcx putting aside my apprehensions on $/Re..
Hi Rajesh,
Thanks for those kind words. Gold has been in a bit of sweet spot, I thought the May peak was THE ULTIMATE PEAK, but it has gone ahead and made new highs. This is called an extension in EW model. When the move ends, which i think it has, the fall will be very sharp. But since it has been, say sort of, my bete noire, I’m a bit cautious. The chances of it coalescing into a much bigger drop has 2/3rds probability. In May I thought it was headed for 1150. That would be the next level if it goes below 1480. This time the Dollar Index is also in favour (breakout) which was not the case earlier.
All the best,
Jai
Hi jai,
Thanks for your thoughts on the Nifty.
Any views on those stocks which have held out in this fall ? Any comments on Jubilant F, VIP or Hero please ?
Thanks
Hi Jai..
Well done on your analysis..brilliant work..You keep amusing CNBC crowd… I need some assistance in EW numbering on nifty..Is there anyway that you could update the last EW posted. I am still reading the book on EW that you suggested so wondering how time lines play out..Fibonaci numbers as bottoms and tops? I maybe completly wrong so pls forgive my ignorance.
hello sir
as always silver near to your expected levels
hello sir
happy to see 26.39 .these movements are very rare to see not everyday thank you
Jai,
Brilliant call on Silver. $26 is here. Do u think there is a chance of a bounce back for wave 4 ?
Regards
hello sir are you active on twitter
Dear Jai,
With DJIA having closed above 11000, and Nifty back in the 4900+ arena, could there be a short-term trend reversal? Since I am short at 4800, I thought I would take your view,
Thanks in advance
Regards
hi ajay,,
from the charts , nifty seems to form a double bottom…….. unless 4700 breaksdown.. further correction is questionable………… my idea wouldbe keep a stoploss at 4700 and on dips closer to 4750 go long………….. i am just giving my view…… lets c what jai says…………..
1. From the time I know him, I remember I have always wondered whether Jai has a direct line to God. 🙂
2. And yes Jai loves all sweets (mithai). How he manages to not put on weight is amazing and frankly irritating to those of us who do. 😛
Cheers.
hi jai,
is it okay if i give my view on the questions asked by fellow trader????
regards
Cheers jai
Silver bang on 26 and bouncd 0.382 to 33.2. Great jai.
come nifty a=c, I assume a is (6336-5177) = 1159. if (a=c)then tgt for nifty is (5177-1159) = 4018. any possibility. U’r views pl.