I have been noting of late that silver has been providing us with the clearest perspective in the metals complex of late, which is why I have been so keenly focused on its movements.
For those following me on Friday, you would remember that I was expecting an imminent bottom in silver, so much so that I even suggested a “lotto-type” trade on the long side in silver Friday morning. But, I was not sure if that rally was going to be a corrective rally in wave 4 within this c-wave of a more expanded wave , or if the bottom had been struck, and we were starting the next impulsive rally higher.
I even went so far as marking up an 8-minute chart to identify if the rally off Friday’s expected low was taking shape impulsively or correctively. And, until today, the market was showing us the potential for an impulsive move. Yet, today, the action was taking shape as more of a b-wave pullback within wave 4 than the continuation of an impulsive move up. Of course, it is possible we are developing a 1-2, i-ii off the low, but I will need to let the market prove that to me. And, to be honest, that is a very reasonable count, as we had two VERY nice 5-wave structures develop off last week’s low. But, for now, I am tracking the corrective count until we break out through resistance.
Now, since the .382 retracement of wave 3 is the common expectation for wave 4, which in our case is in the 22.75 region, it also resides just south of the 1.00 extension within the c-wave down, which is also a common target for a 4th wave. So, for now, that is going to be my ideal target zone for a 4th wave bounce.
Since the current move off this week’s high is taking shape as an overlapping corrective structure, I am assuming it is a corrective b-wave within wave 4. So, as long as the support box over 21 holds in silver, I am looking for another rally to be seen in silver it the coming days.
As far as GLD is concerned, it all looks like a big diagonal, so I really have no other reasonable count right now other than a wave iv even with a lower low. So, I am not going to be touching the GLD, as it is likely going to be a tough rally to outline since it will likely be within a 3-wave structures. But, a rally is nonetheless what I expect once this downside has confirmed to be completed.
Now, GDX is kind of a hybrid between GLD and silver. If we do get a 4th and 5th wave in GDX as similar to silver, then GDX can also see a marginally lower low and reset its count as did silver. In that event, I think GDX and silver will likely present us with the best opportunities going forward into the last half of 2022 and into 2023. So, for now, I am going to reserve my opinion on GDX.
In summary, silver has presented us with the clearest chart I am seeing in the metals complex of those that I track. Of course, we may have a 1-2, i-ii off the lows in silver, as we have two REALLY nice 5-wave structures of the lows. But, until silver can at least clear the 23.25 region, I am viewing any further rally as a corrective wave iv.
In the bigger picture, I am again going to be looking for an opportunity to do an aggressive long side trade in silver, or possibly in GDX as well. Once we have a confirmed c-wave completed, I think we will see some amazing opportunities presented in the metals complex in the coming months.