While many of you viewed me as stubbornly clinging to my expectation for another drop to complete this consolidation/pullback in the metals, I have to be honest and tell you that it was not easy sticking to my guns on this one.
And, now, I think we may finally see fireworks in the metals over the coming weeks.
I would like to start with the GLD chart. Most specifically, let’s review the 8-minute chart, as I think that gives us the clearest structure to follow on the micro count.
As you can see, it seems as though we are in the heart of a c-wave down. Within the micro count, the most likely structure suggests that we bounced in wave iv of 3 into the end of the day. As long as the market remains below the 147.10 level, then pressure will remain down toward at least the 145 region. However, as I noted earlier today, we often see extensions within wave v of 3 in metals. So, it we may extend down to the 144 region for wave v of 3. At that point in time, 146.50 becomes resistance for wave 4 of this [c] wave down.
So, this would suggest that as long as the GLD respects the 147.10 level, we can reasonably expect two more lower lows. But, if we see a move through 147.10, then either the market is tracing out an ending diagonal for this [c] wave, or it may even be completed. A move back through 149 in impulsive fashion is the first indication a bottom has been struck, and we have begun wave 3.
In moving onto the GDX chart, I would like to maintain the same count on this micro structure as well. But, to be honest, I don’t think that count fits quite as well. For now, I am simply going to see how we move down into the 27-27.60 support region. But, should we break down below the 27 region, it opens the door to the more extended alternative c-wave down towards the 25-26 region. But, I want to reiterate that this is the alternative count at this time.
Micro resistance in GDX is 28.20, which keeps pressure immediately down. It would take an impulsive move through 28.45 to even begin to consider a bottom has been struck. And, clearly, follow through over 29.20 will turn this chart rather bullish, as it would likely mean we have begun wave [iii] higher.
As far as silver is concerned, I am really torn as to whether the wave ii pullback will hold. And, much will likely depend on whether it can hold during the next decline in wave v of 3 we see in GLD. But, if we do break down towards the 17-17.10 region for alt , then we would need to build another i-ii structure higher into the 18-18.60 region again to provide us with that break out set up we have been tracking.
In summary, with this decline, we have now moved into the c-wave pullback I have been expecting to see in GDX and GLD. While the micro counts still suggest that at least one more lower low can be seen, one must remain on their toes, as this pattern can easily truncate as we have seen in the past when it comes to metals. For this reason, I have given you the levels of micro resistance overhead of which to be mindful over the coming days. The next rally will likely be quite strong, and may be quite similar to what we experienced in early 2016.