With the silver continuation move higher this week to the bottom of the prior uptrend channel, it seems silver has struck its head on resistance. In fact, we can even view that initial rally off the recent lows as a 5-wave structure. So, of course, we are now looking for a corrective pullback to keep pressure higher, with my next target being in the 16 region. And, as I have highlighted before, I would prefer that rally to be a larger b-wave in an a-b-c wave 2 flat in silver.
This b-wave rally in silver would wonderfully coincide with a 5th wave higher in both GLD and GDX, which is still needed to be much more confident of a lasting low having been struck in the complex, as a whole. While there are still many individual miners which are still well below their potential for 5-waves off their recent lows, it is possible they have still not struck their final lows, and may do so on the wave 2 retracement I would expect in GDX. Have I mentioned before about the bifurcation still evident in this market? (smile)
But, the important point is that I believe a higher high in both GLD and GDX would provide us with a better 5 wave structure off the 2018 lows, and make me much more confident in buying all corrective pullbacks from this point forth. And, as long as the recent pullback lows hold, I think we have begun that rally to complete the 5-waves higher.
In fact, I can even count a micro 5-waves off the recent c-wave low in GLD. And, as you can see from the attached 8-minute chart on GLD, we “should” hold over the 121.50 level and head higher towards the 128 region to complete the 5th wave off the 2018 lows.
Most importantly, in silver, I would not want to see a breach of last week’s low of 14.80. That could open the door to a much bigger decline, so please place your stops accordingly. While 14.60 is still the main support I am keying in on in the bigger perspective, I would prefer us to remain over 14.80 at this point in time.
And, until such time we get that higher high in GDX and GLD, I still remain cautiously optimistic, as I have also noted many times before.