Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
Stocks, Gold, Dollar, Bitcoin Markets Analysis - 23rd Sep 17
How Will We Be Affected by a Series of Rate Hikes? - 23rd Sep 17
Fed Quantitative Tightening Impact on Stocks and Gold - 22nd Sep 17
Bitcoin & Blockchain: All Hype or Part of a Financial Revolution? - 22nd Sep 17
Pensions and Debt Time Bomb In UK: £1 Trillion Crisis Looms - 22nd Sep 17
Will North Korea Boost Gold Prices? Part I - 22nd Sep 17
USDJPY Leads the way for a Resurgent Greenback - 22nd Sep 17
Day Trading Guide for Dummies - 22nd Sep 17
Short-Term Uncertainty, As Stocks Fluctuate Along Record Highs - 21st Sep 17
4 Reasons Gold is Starting to Look Attractive as Cryptocurrencies Falter - 21st Sep 17
Should Liners Invest in Shipping Software Solutions and Benefits of Using Packaged Shipping Software - 21st Sep 17
The 5 Biggest Bubbles In Markets Today - 20th Sep 17
Infographic: The Everything Bubble Is Ready to Pop - 20th Sep 17
Americans Don’t Grasp The Magnitude Of The Looming Pension Tsunami That May Hit Us Within 10 Years - 20th Sep 17
Stock Market Waiting Game... - 20th Sep 17
Precious Metals Sector is on Major Buy Signal - 20th Sep 17
US Equities Destined For Negative Returns In The Next 7 Years - 3 Assets To Invest In Instead - 20th Sep 17
Looking For the Next Big Stock? Look at Design - 20th Sep 17
Self Employed? Understanding Business Insurance - 19th Sep 17
Stock Market Bubble Fortunes - 19th Sep 17
USD/CHF – Verification of Breakout or Further Declines? - 19th Sep 17
Blockchain Tech: Don't Say You Didn't Know - 19th Sep 17
The Fed’s 2% Inflation Target Is Pointless - 19th Sep 17
How To Resolve the Korean Conundrum  - 19th Sep 17
A World Doomed to a Never Ending War - 19th Sep 17
What is Backtesting? And Why You Need Backtesting System? - 19th Sep 17
These Two Articles Debunk The Biggest Financial Nonsense I See In The Media - 18th Sep 17
Bitcoin Price Crash 40% In 3 Days Underlining Gold’s Safe Haven Credentials - 18th Sep 17
The Sum of Risks – Global, Strategic, Political, and Financial - 18th Sep 17
The Netflix Of Canada’s Cannabis Boom - 18th Sep 17
Stock Market Sentiment Speaks: Either You Learn From The Events Of The Past Week, Or You Are Hopeless - 18th Sep 17
SPX 2500 … At Last! - 18th Sep 17
Inflation Lies, Lies and OMG More Lies - 18th Sep 17
How to Choose right Forex Trader? - 18th Sep 17
Who Has Shaped the World the Most? The Dozen Greatest Achievers - 17th Sep 17
Riding the ‘Slide’: Is This What the Next Stocks Bear Market Looks Like? - 17th Sep 17
Gold Up, Markets Fatigued As War Talk Boils Over - 17th Sep 17
Predicting the Future of the U.S. and the World - 16th Sep 17
Deceit in the Financial Food Chain - 16th Sep 17
Gold GLD ETF Investment Resuming - 16th Sep 17
Extreme Weather & Energy Markets: What's Next? - Video - 15th Sep 17
Trump’s Path to IP Wars - 15th Sep 17
GBP USD Approaches Fibonacci Target - 15th Sep 17
Higher US Interest Rates May Force Higher Inflation Rates - 15th Sep 17
Stock Market Investors: Taking the Road "Less Traveled" Has Its Perks - 15th Sep 17
The 3 Best P2P Lending Platforms For Investors In 2017—Detailed Analysis - 15th Sep 17
The US Debt Bubble Will Soon Warrant Serious Measures - 15th Sep 17
Why it is Often Difficult to Sell a House Fast - 15th Sep 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Is It A Bull Market Or Bear Market In Precious Metals?

Commodities / Gold and Silver 2017 May 17, 2017 - 08:04 AM GMT

By: Avi_Gilburt

Commodities

By Avi Gilburt : First published on Saturday May 13 for members of ElliottWaveTrader.net: Without fail, each and every time the metals have dropped since bottoming over a year ago, many panic and proclaim the bear market to have returned. Moreover, many have looked to the USD as their guide to what the metals will do, and are completely befuddled when the dollar trades in tandem with the metals, as we have seen for almost two months.

As for me, well, since I was taught at a young age not to “ASSUME,” I only listen to price and try to ignore emotion as much as humanly possible. For this reason, I rely on my analysis to make decisions, as relying upon emotion often puts you on the wrong side of the market at the exact worst time.


Now, clearly, relying on analysis means that I am expecting the market to play out based upon probabilities, rather than certainties. So, I have to expect that I will be wrong in my analysis at times. However, the reason I utilize the analysis I do is because, over time, it has kept me on the right side of the market the great majority of the time, even though it “feels” as though the rest of the market disagrees with my perspective.

Over the last few weeks, the bearish voices have become quite vociferous in their proclamation that the bear market has returned. Yet, as we were dropping into the target I placed on the GDX several weeks ago, I kept reminding those who would listen that one should ignore their emotions of fear, and focus upon the risk/reward being presented before you on the GDX chart, at least as long as we maintain over support.

Now, while I still do not have a high probability confirmation that the bottom has been struck because we still have not completed a larger degree 5 wave structure off that bottom, any further drops to a lower low will likely be met by a strong reversal. The reason I say that is based upon the positive divergences setting up at the bottoming region of late.

You see, a textbook a-b-c corrective structure actually sees the a-wave decline presenting a technically strong price drop, whereas the c-wave presents as a weaker price drop relative to the a-wave, which provides us with a positively divergent bottoming in our technical indicators.

The clear example I can point towards is our daily GDX chart. As you can see, the a-wave of the pullback provided us with a sizeable drop off the highs in February. (Yet, as strong as that drop was, it still held the uptrend channel on our MACD developed since the bottoming late last year). However, what is even more important is that the MACD for the c-wave started at a much lower high, yet seems to be bottoming at a higher low than the bottom struck for the a-wave, despite the price drop being relatively close to equal. I consider this a textbook a-b-c bottoming structure from an Elliott Wave perspective, which is clearly supported by the technicals.

Of course, if we do not complete all 5 waves up, as noted on the attached 8-minute GDX chart, then we can still see a slightly lower low in price, but it will most likely retain its positive divergence, and support a very strong reversal in the opposite direction.

Now, while the GDX and silver have not completed a 5 wave structure off their lows either, and the only way the GLD can present us with a 5 wave structure off the low is as a leading diagonal due to all the overlap, it does not provide me with any strong confidence that the low has actually been seen yet.

So, since the GDX has the cleanest pattern in place to work with from a micro-charting perspective, I am going to focus on that chart this weekend, since the others are not offering any clear impulsive structures to provide us strong insight or guidance. As you can see from the attached 8-minute chart, we have 3 waves up off the lows, and we have even exceeded the 1.618 extension of waves (i) and (ii). This means that as long as the next pullback is corrective, and maintains over the 1.00 extension at 22.20, I want to see a 5th wave develop to complete 5 waves off an a-b-c bottoming, which would strongly suggest the resumption of the next larger bullish trend.

However, if the market drops below 22.20 in an impulsive fashion, we have an early warning signal that the next bullish trend has not yet begun in the complex, and we may very well still see that 20.31 target on the GDX.

So, while you may read emotionally-based or correlative-based perspectives suggesting that the metals are about to crash, I suggest you focus on the chart before you, and analyze it based upon a methodology that will keep you on the correct side of the market the great majority of the time, and using stops for the minority of times you find yourself on the wrong side of price.

See charts illustrating the wave counts on the GDX, GLD & YI.   

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2017 Copyright Avi Gilburt - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife