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A Simple, But Elegant Resolution In The Precious Metals Market

Commodities / Gold & Silver 2019 Oct 03, 2019 - 01:02 PM GMT

By: Avi_Gilburt

Commodities

Originally published on Sat Sep 28 for our ElliottWaveTrader members: With the various charts we track unable to complete 5 waves up off the low struck two weeks, it would seem that we can count all of those charts as having just completed a corrective rally top, with more pullback likely to be seen. In fact, this is primarily why I have been stressing that I was treating the last rally as a corrective one until otherwise proven by the market.


But, as I am about to explain, the current action now leads me to a much more simple and elegant resolution to the structure we have been tracking for a number of months.

I am starting to see more and more alignment that this pullback is actually a 2nd wave in many charts rather than a 4th wave. While there is a reasonable interpretation for this being a 4th wave in a diagonal off the lows struck in 2018, I am going to count this primarily as a 2nd wave for all the reasons I have outlined regarding my more bullish stance in the metals complex, which I have explained at length in prior updates. So, as I have warned in prior updates, please take my leaning towards a more bullish interpretation in the metals complex into account when managing your own positions.

In the most aggressive posture, as I outline on the GDXJ and silver charts, the current pullback can already be heading down in the c-wave of wave (ii). However, as presented by the alternative in yellow, we may still see a rally which can extend the b-wave within the wave (ii) structure.

What I like most about this count now is that it aligns all the charts that I was struggling with over the last several months. As an example, if you look at the daily GDX chart, this now lines up with appropriate targets for a 3rd wave, and all the sub-waves now line up as they should within our Fibonacci Pinball structure. This count is much more elegant and aligns quite well with many of the underlying charts I am currently tracking.

What is also interesting about this structure is that it resolves the issues I have been having in the GOLD chart for many months. This count now provides us with a more elegant resolution and alignment to the larger degree Fibonacci Pinball structure in GOLD, as it aligns the upper end targets quite nicely with the projections presented in a 1-2, i-ii structure.

As you may also recall, I view this count as being quite elegant for the NEM chart as well. And, when we now consider the potential that both the NEM and GOLD have yet to see the heart of their 3rd waves, it would also provide further support to the application of this count to the GDX, as outlined above.

Yet, despite my adoption of more aggressive counts in other charts, I am going to maintain my count as before in the GLD. If the price of gold continues to follow my prior expectation, it would suggest that GLD may lag and may not see the type of acceleration we can see in all the other products we track.

Moreover, I am also going to maintain my count as before in RGLD, as it is really filling in best as presented on the current chart.

So, as I have been scrubbing all the charts I track and overlaying many calculations with the various scenarios I am contemplating, I have come to the conclusion that the 1-2, i-ii structure I am adopting this week provides us with the most elegant and simple solution to resolve the issues I have been having in a number of charts for the last few months as we have been tracking this rally we have been expecting.

And, if I am correct, then the next break out in the complex should be a breathtakingly strong move to the upside, and should begin over the next few months. However, please maintain some patience, as I am still uncertain if we see more of a direct drop to complete the current pullback we are tracking, or if another rally will provide us with a more expanses b-wave within this a-b-c pullback structure.

But, once the market completes this pullback structure, and then provides us our next 1-2 structure to the upside, I will be alerting all our members to prepare for what can be a very strong rally, which will likely be more akin to what was seen in 2016. Stay tuned.

See charts illustrating Avi's wave counts.

Avi Gilburt is a widely followed Elliott Wave analyst and founder of ElliottWaveTrader.net, a live trading room featuring his analysis on the S&P 500, precious metals, oil & USD, plus a team of analysts covering a range of other markets. He recently founded FATRADER.com, a live forum featuring some of the top fundamental analysts online today to showcase research and elevate discussion for traders & investors interested in fundamental rather than technical analysis.

© 2019 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.


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