Is The Metals Rally Done?

If you read the weekend analysis I put out late Saturday night, then you would have expected this rally we experienced during the first half of this week.   However, we have now arrived at a very important juncture, which will likely determine if this rally has more legs over the coming weeks, or if we see that weakness that I was expecting when this move completed.

As it stands right now,  both gold and silver are completing a potential a-b-c corrective rally, which if correct, would resolve with a 5-wave decline for wave 1 of their respective c-waves lower.   So, those that do not want to experience another draw down would want to lighten their load at this point.  However, those, like me, who have retained their positioning during this entire rally, can choose to add some cheap protection instead.

When you look at the attached 8-minute GC chart, you will see that this rally should be completing the [b] wave of a much larger b-wave within the 5^th wave in the ending diagonal I am tracking.  And, should we see a 5-wave drop from the conclusion of this rally, that will confirm that wave count. However, if the market simply provides us with another corrective pullback and then another higher high, then that would be wave [v] of wave 1 in yellow, and suggest that we are ready to rally in the c-wave of the 5^th wave of that ending diagonal structure sooner than I currently am expecting.  And, should that occur, then we can choose to buy the wave 2 corrective pullback.

Silver is presenting us with the exact same potential as gold, which you can see on the 144-minute chart. I will be tracking the next drop very carefully to see if it takes shape as a corrective pullback or as a 5-wave structure which would be the initial signal that the c-wave lower is in progress.

GDX is still set up a bit differently, as it is has a much more bullish potential in its current structure. As long as GDX holds over the 36.75 low for its wave ii pullback, then this is pointing us higher in a more direct manner.  The next hurdle to overcome is the blue box pivot between the .618-.764 extensions.  Should we break out through that region and attack the 1.00 extension in the 41 region, then the pivot becomes our support.  Therefore, anyone playing this to the long side in a shorter-term position should use 36.70 as their current stop, and then raise that stop to just below the pivot should we approach the 41 region in the coming days.

So, while GDX could be telling a different story than silver and gold, I am assuming that this issue will likely be resolved over the coming week, as we follow our parameters as outlined above.