Initially, we will discuss together the major trend for the metal before being involved in predicting its movements during 2012. The first provided weekly graph show how the metal succeeded in drawing an uptrend after placing the significant bottom of 680.00 in the third week of 2008 and this bullish trend has taken the metal during the past three years to the all-time high around 1920.00 zones which was recorded in September, 2011.

1

Studying the price behaviors of the metal after placing this peak suggests that it has lost its upside steam as it lost about 25% of this uptrend within just three months.

Within three waves to the downside from the peak, the metal has been taken to re-test SMA 50 in the second week of December for the first time since April, 2009.

Shall it breach this caught trend line? Answering this question requires examining the monthly chart to have a deeper look at the monthly candlestick formations.

2

The above seen monthly chart shows that the bearish effect of September's candlestick pattern continues affecting the current price behaviors.

Back to the first weekly chart, we can see two bearish technical catalysts encouraging us to suggest potential bearish scenario for the metal during 2012 as follows:

  • The bearish signal on MACD traditional is the first clearer negative one during the period of our captured trend, which could be compared with the positive sign that appeared with the starting point at 680.00.
  • The classical probability of the double tops despite the $118 distance between 1920.00 and 1802.00, but we should note that we are talking here about weekly chart; thus, the peaks might not be twins. Of note, this pattern is just an expected construction and the metal should close below the neckline areas at 1533.00 with a weekly closing to confirm it, but if the metal succeeds in clearing 1533.00, we may see a panic sell-off targeting 1085.00 areas.

Finally, the following chart shows a potential Elliott scenario for the metal which may explain the weekly uptrend from 680.00 zones.

3

From the first look at the above daily chart, you may think that the first and third waves are equal, but measuring the distance between the starting point and the top of the first wave compared with the distance from the bigger second to the bigger third proves that the third wave was longer than the first wave.

Anyway, it seems that the market has formed an extended fifth wave that was followed by two corrective waves which are A and B; whilst collapsing sharply and quickly from 1802.00 proposes that we are witnessing the last wave of the corrective structure that completes this Elliott cycle.

Potential technical objective for this sequence reside around 1293.00 reinforcing our bearish technical prospects.

Invalidation: A weekly closing above 1802.00 may threaten the historical high of 1920.00, but we will continue looking at the metal negatively so long as trading continues below 1920.00.