Patiently Waiting For The Metals To Tip Their Hand

I want to again reiterate that the greatest probability path in the larger degree (at least in my humble opinion) is that the metals charts I am tracking should see a lower low before we can begin considering the correction is completed.  However, the charts are still not strongly indicative as to whether we will see a bigger rally before we begin that drop, or if we are going to begin that decline phase to lower lows more imminently.

Let’s start with the GDX.   As you can see, we have bounced to the resistance region for wave ii of 3 to the downside.  And, as long as today’s high holds, then that is a very reasonable wave count.  But, we will need to see another 5-wave decline from here to suggest a decline to the 82 region is next, which if broken, points us directly down towards the 60-70 region to complete this c-wave.

Of course, should the market break out through this resistance in a meaningful way, then we will be able to take off the 1-2, i-ii immediate downside potential from this chart, and we will then be left with just the purple wave count and the blue wave count (the blue count suggests a bigger 1-2 downside set up, and much more likely points us down to the 60 region).

So, clearly, we need a bit more information before a higher probability path makes itself known.

In gold, the purple path is still very much alive, but I will still need waves iv-v to complete before I can consider that potential a bit more strongly.  And, even if we do see that iv-v, it still can be a 5-wave c-wave in an expanded b-wave rally.  Therefore, even if we do see the iv-v develop in the coming days, the nature of the decline thereafter should provide our main clue as to whether that is an upside set up in purple (a corrective pullback after a 5-wave rally), or if we are heading down to the lower lows in the 3800-4000 region in a more direct fashion (which would be signaled by a 5-wave decline).  In either case, a break down below the purple b-wave low makes it likely that we are heading down in the c-wave to the 3800-4000 region, especially if that break down is impulsive.

Silver is probably the least clear of the 3 as to its potential for the purple count, which means that I may be leaning slightly towards silver suggesting the more immediate decline with a b-wave topping out soon.  But, I do not think it is high enough probability to trade just yet.

So, for now, I am still going to be a bit more patient and allow the market to tip its hand before I am willing to consider positions on either potential path at this time.