Bear Flags Galore in Silver SLV

Mar 18, 2009: 1:29 PM CST

Silver (and SLV) took a brutal hit today, and fell at one point 6% intraday.  It provided an interesting structure and lesson in momentum lows and bear flags.  Let’s see it as it’s developing.

SLV (Silver ETF) 5-min chart:

I’ve never seen so many bear flags in a single day (at least not that I can remember).  Each retracement took price back to the falling 20 EMA, where – in all cases – nice little dojis formed which offered excellent, low-risk entries (stop beyond the 20 or 50 EMA, entry on the candle after the doji).

I’ve also never seen such perfect plunges after a bear flag formed.  This is a good day for the record books.

Also, we learn a lesson on momentum – such that New Momentum Lows Precede New Price Lows.

Notice on each of the flags, we had three new momentum lows, which implied that – following a retracement (the flag) – odds favored the actual price low was yet to come.

On where I captured the chart mid-day, we’re seeing a distinct positive momentum divergence into the most recent price lows after 1:00 – momentum is NOT confirming this price low.  So many times actual intraday price lows are formed on positive momentum divergences.  I’d be willing to bet that we’ve put in the low for the day or at least that odds are reduced that a bear flag will form successfully off this recent retracement rally.

Still, just take today’s action as an educational lesson in momentum, “Trend Day,” and bear flags.

Corey Rosenbloom
Afraid to Trade.com

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13 Comments

13 Responses to “Bear Flags Galore in Silver SLV”

  1. Anonymous Says:

    {not about the SLV) – some indeces as xlf and ndx are at higher levels of what was supposed to be the 5-1 lows (mid january) , even the sp500 was a few ticks from there; do you think we are at the ‘alternative’ bearish scenario?

    abe

  2. Corey Rosenbloom Says:

    I know Elliott Wave purists will nail me for this, but I’m not a stickler for “Wave 4 went one tick into the price territory of Wave 1.” I’m not going to change my wave count based on one tick.

    If we stay at these levels and head higher, then yes, I’ll change and believe either we’re in a larger Triangle or that we have put in a bottom here.

    We’re close to having to revise, but not just yet.

  3. Anonymous Says:

    Excellent analysis! SLV recovered sharply after 2:15 pm when FOMC announced injecting 1 T $ into financials.

  4. Anonymous Says:

    Thank you very much!

  5. Anonymous Says:

    GLD appears to have broken out of a flag on its daily chart on strong volume. SLV has not and TBT still in triangle along with $UST. Is this a fake breakout or would you wait for confirmation tomorrow on GLD and SLV? Also shouldnt you turn off momentum indicators on trend days?

  6. DaveB Says:

    I see a potential “3 push” on the GLD 5 minute chart. Three spike highs in the afternoon, each on lower volume and lower momentum swings.

    Not trying to be a bear here, I think today’s action can only be viewed as bullish. But this observation suggests you may be able to get long gold at better prices tomorrow.

  7. Anon Says:

    Corey, I think Elliot Wave is a scam like Madoff. I don’t undermine your efforts, in fact I appreciate your work everyday. It is just bad that you follow that scam. I will surely be back, to apologize, if the ticks follow EW from here. I just don’t think so though, the market doesn’t follow the herd.

  8. Corey Rosenbloom Says:

    Anon,

    Thanks – I got lucky with posting this one. Didn’t make any profit off it – just was pointing out the weird structure in SLV. Happened to catch it just at the right time. About 10 min after this post went up, price surged on the Fed news.

  9. Corey Rosenbloom Says:

    Anon,

    I’ll try to post up a quick grab of those charts – there was some wild action in those. I’m still trying to sort it all out. I’d wait for the dust to settle before trying to jump in on any of these.

    And usually we get the *opposite* indicator on trend days – usually it shows a false positive divergence. In this case, the oscillator actually confirmed the trend all the way down and correctly identified the low via a divergence. That’s also why I chose to put the example up – it bucked the … trend.

  10. Corey Rosenbloom Says:

    Dave,

    Yup – good call. The last three ‘pushes’ into the close on GLD formed our “Three Push” reversal structure.

    Again, I’m still trying to sort-out the fallout from these intraday surges.

    Anyone see the dollar (or UUP)? Ouch.

  11. Corey Rosenbloom Says:

    Anon #7,

    Hey I’m not the world’s biggest Elliott Wave defender or advocate. I treat it like I do any other indicator – I don’t get upset when the 3/10 gives a false divergence signal or when price keeps going up after an overbought reading in the RSI or Stochastic.

    It’s a tool in the arsenal – EW is not absolute, but it gives insight into a possible pathway for price and serves as confirmation/non-confirmation so I find it helpful in that sense.

    I’m just like you – I’m in a “Wait and See” mode.

  12. silver price today Says:

    Hi,

    Thanks guys for sharing information about Bear Flags Galore in Silver SLV.

  13. silver price today Says:

    I'm glad things have turned around and that we haven't seen a pattern like this in a while.