Largest Single Day Decline Since Rally Began
By
Avi Gilburt
Today gold has experienced the largest single day decline since this rally began. The question of course is if this is the wave iv in blue or if we have finally begun a larger degree correction for wave (4)?
As I am writing this update, the market is approaching the top of the support box for the alt iv. That is the 3930 region. We will have to watch this action very carefully in the coming days. As long as all bounces are corrective, we can maintain a reasonable expectation for at least one more decline. That means we can view this as an a-wave decline today, with the expectation of a b-wave corrective bounce.
Of course, if the next “bounce” is clearly impulsive, then we will have to continue to look higher sooner rather than later.
Silver is pretty much of the same perspective. With the strong reversal today, I think it is still more reasonable to view this action as just a continuation of wave 3 of (3), and today begins wave 4. So, for now, I am viewing this as an a-wave for wave 4.
Keep in mind that I will be looking for a buying opportunity for a more aggressive position if we get the full a-b-c structure take shape in the coming days, along with the MACD re-setting lower into the box below. Of course, it can go deeper, but what I will be focusing on is a completing a-b-c pullback.
GDX has also seen a sizeable decline today. But, we are still well above even the initial support region for GDX. That is the support which I would want to see broken to give me an indication that the larger degree 4th wave is likely in progress. That is the next opportunity upon which I am focusing in order to get back into the market on the long side with the cash I have raised from selling into this rally.
For now, I am going to be tracking an initial a-b-c pullback. And, as long as the next “bounce” remains corrective, I can reasonably expect a c-wave down thereafter, which could present a trade in the silver chart.
