With the GLD breaking below its ideal support of 123 within the standard Fibonacci Pinball structure, it is often a warning that the rally is only corrective, and it may be dropping back down again to the 120-121 region. But, this is clearly not a foregone conclusion.
The drop to the lows struck last week really do present as a nicely completed 5 waves down to complete the c-wave of wave (2). So, the other two potential bullish structures we are tracking within the short term is a leading diagonal, or even a 1-2, i-ii structure off the lows. But, at the end of the day, as long as the GLD remains below the 124 level, it has significantly increased the potential to drop down to the 120-121 region. And, for this reason, I noted on Monday that it would be a good idea for those who want to protect their positions to use that 124 level for any short positions you choose to take.
As far as GDX or silver are concerned, it is still very hard to see an immediate bullish set up, as long as we remain below last week’s highs. And, as I said over the weekend, as long as the GDX remains below the 23.19, it looks like it wants another drop. In fact, as long as we remain below the 22.74 level, I can even make out a 1-2, i-ii to the downside pointing to the 20.20 region.
So, at this point in time, I am going to have to lean a bit more bearish in the SHORT TERM as long as the GDX remains below 22.75. However, if the GDX can break out over 22.74 and invalidate this immediate downside set up, along with the GLD breaking strongly back out over 124, then we can again begin to track the next break out set up.