With the follow through we had to the downside today, the question we are now facing is if the big 5th wave to new lows has begun, or are we just completing a 5 wave (c) wave within a corrective b-wave?
Well, the first clue would be if we completed wave 3 today or not. As I said last night, if the market is going to provide us with standard extensions to the downside in this drop – which is not typical of drops in metals – then it goes a long way in telling us we are only in a b-wave down. Today, IF we completed wave 3, then we did so at the 1.382 extension, which is VERY short for a 3rd wave in metals. Normally, this would be the wave (iii) of 3 target, with the wave (v) of 3 target taking us down to at least the 2.00 extension (122.75), or ideally, at least the 2.618 extension (121.50). Therefore, should we see a drop to the 121.50 region by tomorrow, I will be heavily leaning on the side that we have potentially completed the e-wave of the 4th wave, and we are on our way to new lows.
However, should the market move up towards the 124.70-125.50 region, I would consider that a 4th wave in either the standard impulse or as an ending diagonal, and still expect one more drop towards our blue box. If that is seen, followed by a strong reversal in 5 waves up, then my primary pattern has us looking higher to the 130-132 region, for a c-wave in the e-wave of this larger degree 4th wave.
So, the next 24-48 hours in metals should be very telling about the market action we can expect for the next few months.