As I have been highlighting over the last two weeks, we were heading to the completion of this corrective pullback in the metals. And, I wanted to see a nice 5-wave structure off those lows, followed by a corrective pullback, and then a continuation higher to complete a larger degree 5-wave structure. That larger 5-wave structure will likely have us begin preparing for a major break out in the heart of a 3rd wave and a melt-up phase as we look to the 2nd half of the year.
As it stands right now, I can make out a small 5 wave rally off the low in silver and gold. GDX is still a bit questionable. So, I am going to give the metals a bit of room to run over the coming week to prove that a bottom has been struck. Until that point, I am going to keep my eye out for a “potential” lower low yet to come. But, I see that as the lesser likely path right now, especially in gold and silver.
As you may be able to tell, I am trying to keep this update relatively simple so that I do not get you overly-emotional at a potential bottom being in place.
But, I do want to note one point about the larger time frame charts. As I have said before, they are set up in an almost text-book structure. What we are going to want to see now is the break-out set-up outlined on the 60-minute GC chart and 144-minute silver chart. And, I am assuming that the daily MACD’s will likely begin to turn positive when that set up is in place. So, that is what we are looking for next to prepare for a major potential move in the metals complex over the coming weeks.
Lastly, for most of you that are interested in this complex, it is probably best to continue to layer your positions as you move into the market for risk management purposes. The next potential is during a wave [ii] pullback after the next larger 5-wave rally structure completes. And, you can add a final position when the market breaks back out over the wave [i] high. So, there is still some work to be done before we get the final break-out signal, and the melt-up begins.