Advanced Fibonacci Confluence Projection in SLV Silver ETF

Oct 5, 2009: 2:49 PM CST

I was doing some work on the Silver ETF (SLV) and wanted to show a simplified version of a potential ‘confluence projection’ zone at the $18 level which I found interesting and worth a look.


(Click for Full-Size image at Flickr)

I noticed that the recent price swings were symmetrical, and I wanted to see what overhead levels of Fibonacci Price Extension (the Extension Tool on most platforms) existed.  These are drawn with the Blue Lines.

Most extensions start with a low, are drawn to a swing high, and then are drawn to the next swing low.  See my basic tutorial on my “How Do You Draw Fibonacci Extensions/Projections?” post.

For example, the first extension starts at the $8.45 low, rises to the $14.42 high in February 2009, and then ends at the April lows near $12.00.  The grid is drawn upward which shows the 61.8%, 100%, and 138.2% Fibonacci projections.

The second grid is drawn using the same logic.

The red lines reflect Fibonacci Retracements – the first of which “retraces” from the March 2008 high to the October 2008 low – I eliminated the main retracement lines and am just focusing on the 78.6% retracement at $18.07.

Finally, I’m showing what Robert Miner calls an “External Retracement” off the $8.45 lows to the $14.42 highs – revealing the 138.2% “external retracement” at $16.70 and – more importantly – the 161.8% external retracement at $18.10.

What’s the point?

All four Fibonacci tools reveal confluence at the $18.00 per share level, which is above price currently.  This makes it both a potential “scalp” target to play for, and also a possible low-risk, high probability short-sell trade if this level does hold as “Confluence Resistance” (assuming you use other methods and do your own analysis).

If price does support here at the $16.00 per share level, look for a play to $18.00.  If price makes it to $18.00, consider taking profits and see how price reacts to these confluence Fibonacci zones.  No guarantee they or any method will be 100% accurate – remember it’s always about the probabilities.

If anything, you can file it under “Hmm.  That’s interesting.”

For more information on Fibonacci, see basic intro Fibonacci information at our free and growing Education Section.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

10 Comments

10 Responses to “Advanced Fibonacci Confluence Projection in SLV Silver ETF”

  1. Dan de Man Says:

    The bbands have tightened up suggesting that a move will happen in the very near future. As well SLV has touched the 20 day ema the second time in a weak forming a possible double bottom. The 3,10,16 macd is also a hairline away from a buy singnal. Looks like a low risk swing trade to me. My 2 cents.

    Cheers,
    Dan

  2. the99th Says:

    My thoughts exactly. Silver should see its momentum osccillator (whatever you like to use) flip in a shallow cycle for a wave 4 and then rally sometime in November to the 18s maybe peaking in the low 19s, then its Primary C time.

    Of course when the dust settles you should be on schedule for the start of Cycle wave 3 of Supercycle wave 3, silver will go from 11.80 or 7 or 13 or wherever it finishes the wave C all the way to 40 in a matter of years.

  3. Bob Says:

    Over night the USD weakened dramatically. Across the board, commodities are up strongly in pre-market trading. Recent highs – Oil (light) $71.55; Gold $1030.20; Silver $17.06. At least at the open, this should have a significant and favorable impact on the equity markets and support a continuation of the rally.

  4. Bob Says:

    From the July 09 low, price has advanced and looks to be in the fourth wave of a fractal expansion. When considering the upper target of this total expansion, the gap ($15.37), evident in the third wave, should be representaive of the halfway point in the overall expansion. Since proportion should also be expected, the $3.07 move to the halfway point, gives an estimated price target of $18.44.

    There seem to be a number of elements pointing to the low $18's as a probable inflection zone.

  5. Bob Says:

    Over night the USD weakened dramatically. Across the board, commodities are up strongly in pre-market trading. Recent highs – Oil (light) $71.55; Gold $1030.20; Silver $17.06. At least at the open, this should have a significant and favorable impact on the equity markets and support a continuation of the rally.

  6. Bob Says:

    From the July 09 low, price has advanced and looks to be in the fourth wave of a fractal expansion. When considering the upper target of this total expansion, the gap ($15.37), evident in the third wave, should be representaive of the halfway point in the overall expansion. Since proportion should also be expected, the $3.07 move to the halfway point, gives an estimated price target of $18.44.

    There seem to be a number of elements pointing to the low $18's as a probable inflection zone.

  7. Daily Triangle and Flag Targets for Gold Oct 8 | Afraid to Trade.com Blog Says:

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    […] Weekly View of Targets for Silver Nov 10, 2009: 11:28 AM CST // Since my last post on Silver Prices on October 5th, Silver prices have achieved the $18.00 per ounce price target and have hovered underneath that […]

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    […] my last post on Silver Prices on October 5th, Silver prices have achieved the $18.00 per ounce price target and have hovered underneath that […]