Top May Be In For Metals

With the market striking our resistance targets, we clearly have enough waves in place to consider the top to wave 4 to be in place. 

Most specifically, the GLD actually struck the a=c target this past week, and has since developed what MAY be counted as an initial micro 5 wave down off that high.  GDX can be viewed in similar fashion.  But, the follow through on both has given me some questions.

In simplest terms, as long as we do not exceed the highs struck this week, we need to next see support broken to suggest that the 5th wave lower has begun in earnest.

One issue I am having is that silver did not reach its target.  Moreover, its upside structure for its 4th wave does not even look complete.  So, this does suggest I have to at least keep my bearishness in check, at least until GLD and GDX begin breaking down below micro support.

The other issue I am seeing some glimpses of right now is that the drop in the GLD looks a bit less than ideal for a continuation pattern in a standard impulsive downside structure.  So, again, it makes me a little cautious and needing a break down below support to open that more immediate bearish door down to the 109 region.  Most specifically, it would not shock me to even see this 5th wave lower turn into an ending diagonal, at least based upon the initial decline seen in GLD.  While it will likely take me at least another week or two to have a better handle on that potential, I am at least seeing a glimpse of the potential from the initial decline.  But, remember, this is all assuming we do not see a rally back through the high struck this week.

As far as ABX is concerned, I think we have more than enough in place to consider 5 waves up done, with the 5th wave being a strong extended 5th wave.  Clearly, it still can rally even more, but I think I am getting close to the point where we should be expecting a 2nd wave retrace.

And, while ABX sees a 2nd wave retrace, I think NEM will likely see a lower low.  If I am going to be a real stickler about the pattern, it almost looks like NEM needs one more push higher before its 4th wave is completed.  But, I have no problem considering its 5th wave in its c-wave of 4 as truncated, as it has been clearly much weaker than other miners like the ABX. 

Moreover, it would seem that the GDX is likely going to be pulled down by the NEM to lower levels as well, as they both seem set up to still drop down to a 5th wave low. 

But, again, I want to remind every that, before you turn too immediately bearish, we still have not broken micro support.  And, as long as that support is held, these charts still retain potential for breaking out sooner rather than later.  But, once we do see a break down of the respective support regions, it would make me much more confident that a 5th wave lower has begun.

GDX-8min
GDX-8min
GDXdaily
GDXdaily
GLD 8min
GLD 8min
GLDdaily
GLDdaily
silver144min
silver144min
ABXdaily
ABXdaily
NEM
NEM
Avi Gilburt is founder of ElliottWaveTrader.net.