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Avi is founder of ElliottWaveTrader.net, a live trading room and member forum focusing on Elliott Wave market analysis. Avi emphasizes a comprehensive reading of charts and wave counts that is free of personal bias or predisposition. A lawyer and ... more

Very Bullish Set Up In The Metals Complex

Date: Tuesday, January 31, 2017 10:01 PM EDT

2.   The correction we have seen off the highs in 2011 have struck appropriate Fibonacci retracements.  While the HUI struck a standard .618 retracement, gold had a shallow Fibonacci retracement, whereas silver had a rather deep one.  But, overall, the complex as a whole seems to have struck appropriate Fibonacci retracement percentages to complete this degree of correction.

3.  Next, the move off the lows is more likely a 5 wave move than a corrective move due to the size of what we are counting as a 5th wave.  I believe counting the 2016 rally as a corrective a-b-c structure is not correct BASED UPON STANDARD STRUCTURES.  (Of course, it can be a non-standard structure, but they are in the lower probability range of market moves).  The significant majority of a-b-c structures see the c-wave presenting as the same size of the a-wave, or, it will exceed the size of the a-wave to as much as 1.382 or even 1.618 the size of the a-wave, especially in the metals complex.  In our case, the 5th wave struck where it normally does in the metals complex between the .618 and .764 extensions.  That is the standard size I would expect in this structure for a 5th wave and not a c-wave.   To me, this is strongly suggestive that the 2016 rally was an impulsive structure which is starting the next bull phase, and presenting a much lower likelihood that this move was a corrective a-b-c corrective structure, since, based upon standards, the c-wave would generally be too small, especially in the metals complex.

And, then in late December, I suggested that we are on the cusp of a 10%+ rally in the GDX:

For those that were with us back then in 2011 not long after we opened our doors at Elliottwavetrader.net, you may remember that I was actually “bullish” as we went into the Thanksgiving holiday due to the extent of the divergences we had seen to that point.  And, if you also remember, the day after Thanksgiving saw a 4% rally off that bottom, with approximately 10% seen within a week. I view the current set up in the metals complex as no different than that one . . .

Since that time, the GDX has provided us with an almost 30% rally off the recent lows.  But, more importantly, the market has provided us with another 5-wave structure off that low. 

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