For those that were in the trading room yesterday morning, you would likely have seen my post that I intended on buying some additional long positions near the open. The market seemed like it was very close to a bottom, and the divergences I outlined on the 144-mintue silver chart strongly confirmed..
Since that time, we seem to have developed a 5 wave structure off this week’s low in both gold and silver. Yet, GDX is not clear enough for me to make a similar proclamation.
Today, pre-market, it seems as though we completed the first 5 waves up off this week’s low. Therefore, the expectation was to see a corrective pullback, and that seems to be what we have been seeing all day.
The time of my writing this update, we have the minimum number of waves in place to consider all of the 2nd wave complete. But, what we need to now see if a break out over today’s high to set up waves [i][ii] for the wave iii higher. Until then, GC does argue for another potential pullback before this 2nd wave completes.
Currently, I have pivots on the smaller degree silver and gold charts, but if we see a deeper wave ii, then I will have to adjust them. Ideally, the market rallies towards that pivot for wave [i] of iii and then pulls back thereafter in a corrective wave [ii], which will set up our next rally in the metals complex.
When you zoom out on the 60-minute GC and 144-minute silver charts, you will see that there is still quite a long way until we get the larger initial 5-wave move off the recent low. That is the one most of us really want to focus upon with our longer-term positions, as well as further aggressive long positions. You see, once that 1-2 structure completes, that will put us on a “break-out-alert,” and when that structure follows through to the upside, we will be starting a very strong multi-week, if not multi-month long 3rd wave rally.
But, first we have to get there. Now, keep in mind that this next wave should take us to the .382-.618 extensions of the first two waves off the low struck last year. Our Fibonacci Pinball structure tell us that the first wave of the 3rd wave often targets that region. So, I have added the box on the 144-minute silver chart outlining that region. In gold, it would point us back up to the recent highs as just the .382 extension. And, in GDX, its between 31-33. Therefore, we are now looking for a clear 5-wave structure into those region to put us on “break-out-alert” over the coming weeks.