GDX Follow Through - Market Analysis for Sep 23rd, 2020

With both silver and GLD breaking down to suggest they were in the midst of a c-wave of their respective 4th waves, today, GDX has followed in their path, and is likely pointing us down to the 37 region now.

Over the weekend, I outlined that the charts were out of time and space if they were going to prove a bottom being in place.  And, with the break down we have experienced, I think we are finally going to see a bottom in the coming over the coming week.

But, in order to really feel good about any bottoming structure, I am again going to rely upon the best signal we have seen in all the 9 years since we opened at EWT, and that is the MACD on the 144-minute silver chart.

Currently, it supports the potential that we are in the 3rd wave of a c-wave in wave iv.  That means we need to see price turn higher back towards the 25-25.50 region.  That will turn the MACD positive.  Normally, when the MACD turns positive it prepares us for a bottoming in the complex, wherein price hits a lower low and the MACD provides us with a positive divergence.  In this case, I am genuinely torn with the potential that silver may complete this entire bottoming without that lower low.  But, as long as we remain below the 25/25.50 resistance, then I think it is reasonable to expect one more lower low in price in silver in the 22 region before this wave iv completes.  And, if you remember, I have been outlining for weeks that if the 26 level breaks, then it opens the door to the 22 region, which is where we now find ourselves.

This brings me to the GLD.  And, ideally, I wanted to see the 173/74 region hold as support for an ending diagonal c-wave.  But, if the bounce we get is clearly corrective, then it is possible we can drop as deep as the 168/170 region.  I really would not want to see us drop that deeply, as the 173/74 region would be ideal support for GLD.  So, let’s see how the next bounce develops before we get too concerned about lower levels.

Based upon the size of this pullback, I have also modified my expectations for the next rally, with a target now between 213-230GLD.

Lastly, with the GDX breaking below 39.29, we have clearly opened that door to the 35-37 region.  But, based upon the current structure, it seems we are going to try to complete the wave 3 in the c-wave of [4], with a bounce yet to come for wave 4.  Unless the bounce provides us with a clear 5-wave structure through the lowered resistance in the 39.65-40.75 region, then I am expecting that to be our wave 4 target for a bounce, to set up the last leg down in this c-wave of wave [4] to at least the 37 region.

The break down this week has certainly clarified the wave count in the metals, and suggests that we should finally see a completion to this 4th wave pullback over the next week or so.  Remember, we will likely still see a bounce before the final low is hit in our standard patterns. But, overall, we should finally be close to completing the respective 4th wave patterns across the complex.  

GDX8min
GDX8min
GDXdaily
GDXdaily
GLD60min
GLD60min
silver144min
silver144min
SLVweekly
SLVweekly
Avi Gilburt is founder of ElliottWaveTrader.net.