Some Evidence Of Deeper Pullback In Metals Charts
By
Avi Gilburt
Coming into this week I was questioning whether gold and GDX may see deeper retracements. And, thus far, I think the evidence is mounting that the answer may be “yes.”
First, in GDX, we clearly have seen a 3-wave rally right into resistance. At this time, that can be all of the b-wave bounce we see. However, I have added an alternative micro-path on the 8-minute chart which could still give us one more rally in a [c] wave to complete a bigger b-wave before the c-wave down takes hold. Should we break down below 35.15, that is a strong sign that the c-wave down has become highly likely. And, for now, I am assuming that can point us down to the 32 region. But, I need to see where the b-wave actually tops before I start setting targets.
In GC, we have not been able to take out resistance either. And, while I can count a potential leading diagonal off the recent low, I do not view them as reliable. If we were to follow through beyond the resistance box on the 8-minute chart, then I may consider that more immediate bullish count a bit more reliable. But, for now, I am viewing GC in the same manner as GDX.
Silver still leaves me with a question. If silver is able to push higher one more time over the coming day or so, then I would be able to count a reasonable 5-wave rally off the recent low. That would be green wave [1] as outlined on the 8-minute chart. Should we see a clearly corrective wave [2], then we have to prepare for the next break out in silver.
Also, consider that the metals counts do not have to exactly mirror each other. On fact, GLD is much further along in its wave count than either GDX and silver, which is why I believe they will see a catch-up phase in the coming months. Therefore, it is entirely with a reasonable probability that silver can see a wave [2] pullback while both GDX and GC see lower lows in their respective wave counts.
So, for now, I am on the fence when it comes to silver as to whether a bottom is in place. If we get a higher high over the coming day or so, then it makes it more likely that silver has a bottom in wave ii in place. However, both GDX and GC are starting to align with the counts pointing to lower lows before the next major rally begins in earnest.
But, PLEASE do not lose sigh of the fact that this set up which is developing is very bullish in the bigger picture. Nothing has changed in that regard. In fact, if we see a 5-wave c-wave down in GDX and a 5-wave 5th wave down in GC, I may consider starting to layer into aggressive long positions as that 5-wave decline is completing.
