Only 3 Waves Up

As I noted over the weekend, at best, I had 3 waves up in the metals and miners by the weekend, and most patterns even suggested a bit higher.  As it stands now, we have a very full 3 waves up off the lows, however, I have no solid indications to be able to count any of the charts as 5 up. For now!

The reason I say “for now” is because if the market provides us with a high level consolidation into tomorrow, and then gives us another rally, I would then be able to count 5 waves off the lows.  And, THAT will make things much easier.  That would likely mean that I would like to expect a wave 2 pullback after that full 5 waves up – which I will label as wave 1 of (c) of b, which is noted on the daily chart  – and will be looking to trade the long side after a wave 2 pullback.

However, should we see a deeper retracement over the next day or two, which takes us down to the target boxes noted on the smaller time frame charts I sent out today as Alerts – which are also attached herein, then I do not have confidence that we will attain the higher level targets we were looking for – that is, I do not have confidence that a (c) wave higher would reach the 2015 highs in anything but silver.  Of course, we can see a large (c) wave that can take us that high, but I will be much more cautious on the long side if this (a)(b)(c) pattern is what plays out rather than the 1-2.  That would mean I would become VERY cautious in this set up once we approach the alt-b targets on the daily chart.

So, in summary, I would still love to see a full 5 waves off the low develop this week, and with a day-long high level consolidation in the charts going into tomorrow, that would give us a nice wave iv, with a wave v taking us higher to complete wave 1 off the lows.  However, if the current pullback becomes deeper, and takes us into the lower blue boxes on the smaller time frame charts, that makes this much more complex, and makes me a lot more defensive in this sector well below the 2015 highs.

BaseCase - GDX5min
BaseCase - GDX5min
BaseCase - GDX
BaseCase - GDX
BaseCase - GLD8min
BaseCase - GLD8min
BaseCase - GLD Daily
BaseCase - GLD Daily
Avi Gilburt is founder of ElliottWaveTrader.net.