Metals Rally Added Complexity
By
Avi Gilburt
As I warned in the weekend update, we needed to see a direct move lower in the complex early in the week to keep the count strongly in the c-wave down perspective. Yet, when gold took out its Sunday night bounce high, I also warned that it would open the door to much greater complexity in our charts, including a potential b-wave triangle, and an ending diagonal for the c-wave down. And, that is currently where we stand.
In looking at the attached 60-minute GC chart, you will see I am outlining the potential ending diagonal structure for this c-wave. It means that I am seeing this bounce as a wave 2, and once we break down below this week’s low, it should make it likely that we are in wave 3 down. But, remember that this is a diagonal, which means I maintain no expectation of 5-wave sub-structures, other than in the b-wave. And the initial move down will be an a-wave within wave 3, so it will not likely be a 5-wave substructure for that initial move lower.
For me to consider anything more bullish, we would need to take out the wave 2 resistance box. For now, I am looking down.
In GDX, we also have a 1-2 downside set up developing as well, and I am unsure as to whether it will also be an ending diagonal, as there is an interpretation that can still keep it as standard impulsive downside move.
Silver had a nice 1-2 set up for a c-wave decline, but the height of this bounce has really put that in question. The alternative I would consider a more complex b-wave noted as alt-b.
Overall, I am still trying to maintain a downside bias due to the lack of a clearly completed 4th wave correction. And, that bias is being represented by my various wave counts. However, I do want to warn that the downside structure have now become less reliable, which means most of you should not be attempting to short this aggressively - and especially not silver. Rather, I think the prudent path is to look for buying opportunities for what I believe will be one final strong rally before this 10 year cycle in the metals comes to a conclusion.
