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Heed the Downside Setup in Silver and Gold
Investors looking on the long side of this market should note this setup, even if they don't trade it.
Avi Gilburt    

I've seen many interpretations of where the metals market stands at this time. Many are bullish, some are rather neutral (expecting more chop in this region), and very few are truly bearish and expecting levels below the 2013 lows. And, as you know, my current perspective remains in the minority.

Yet when the market continues to subdivide to set up what I now view as the potential for a wave 3 of (iii) of III, we don't often get this much warning of a potential "crash" like move in the metals. Why one wouldn't respect this setup and view this potential fearfully (if long) actually surprises me. So my main message this week to all those who are looking on the long side of this market is to at least respect this downside setup, even if you're choosing not to trade it.

From an Elliott Wave count perspective, this past week we had a nice micro 5 wave structure down from the 127 resistance region, which means we should now see a wave 2 corrective rally into early next week. And, as I've maintained for the last several weeks, as long as we remain below the 127 level, this market is set up for what many may consider the next metals "crash." That's what a wave 3 of (iii) of III should feel like, and this is where we can see $3-$4 moves down (or more) in the SPDR Gold Trust ETF (NYSEARCA:GLD) per day, and $30-$40 moves down (or more) in gold.

My alternative count has wave 2 just about completed on Friday, which means early next week we begin that downside phase. But take note that I can't have any bullish alternatives until the 127 level is breached, especially when this pattern to the downside is now set up as dangerously as it currently seems.

Also, if you look at the 144-minute chart (see link at bottom of article), I've provided a "proposed" path for how GLD could drop in five waves into the summer to complete this segment of the three-year-plus correction.

As for silver, I'm going to maintain the same micro count at this time, except that I'm going to try to maintain the ending diagonal potential for the bigger five wave move down. That means we're now in a 1-2 setup in a c-wave of its wave III down. This pattern maintains silver's potential to remain over the 16 region. However, should we see it follow through in the same way as GLD, then it truly opens the door to the 11-14 region in the mini silver futures contract I've discussed in the past. But again, that makes this pullback a likely wave 2 of larger degree and sets us up for a major wave 3, which is calculated to take silver well over 100. So, although there would be more pain to those who have held their long positions, the upside potential becomes that much greater into the future.

See chart illustrating wave counts on gold and silver here.

Editor's note: Avi Gilburt is author 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. His Elliott Wave analysis appears frequently on several financial news sites.

Read more:

Is 1900 Out of the Question Now?

1900 Still Not Out of the Question

No Upside Follow-Through Yet
< Previous
  • 1
Next >
No positions in stocks mentioned.
Heed the Downside Setup in Silver and Gold
Investors looking on the long side of this market should note this setup, even if they don't trade it.
Avi Gilburt    

I've seen many interpretations of where the metals market stands at this time. Many are bullish, some are rather neutral (expecting more chop in this region), and very few are truly bearish and expecting levels below the 2013 lows. And, as you know, my current perspective remains in the minority.

Yet when the market continues to subdivide to set up what I now view as the potential for a wave 3 of (iii) of III, we don't often get this much warning of a potential "crash" like move in the metals. Why one wouldn't respect this setup and view this potential fearfully (if long) actually surprises me. So my main message this week to all those who are looking on the long side of this market is to at least respect this downside setup, even if you're choosing not to trade it.

From an Elliott Wave count perspective, this past week we had a nice micro 5 wave structure down from the 127 resistance region, which means we should now see a wave 2 corrective rally into early next week. And, as I've maintained for the last several weeks, as long as we remain below the 127 level, this market is set up for what many may consider the next metals "crash." That's what a wave 3 of (iii) of III should feel like, and this is where we can see $3-$4 moves down (or more) in the SPDR Gold Trust ETF (NYSEARCA:GLD) per day, and $30-$40 moves down (or more) in gold.

My alternative count has wave 2 just about completed on Friday, which means early next week we begin that downside phase. But take note that I can't have any bullish alternatives until the 127 level is breached, especially when this pattern to the downside is now set up as dangerously as it currently seems.

Also, if you look at the 144-minute chart (see link at bottom of article), I've provided a "proposed" path for how GLD could drop in five waves into the summer to complete this segment of the three-year-plus correction.

As for silver, I'm going to maintain the same micro count at this time, except that I'm going to try to maintain the ending diagonal potential for the bigger five wave move down. That means we're now in a 1-2 setup in a c-wave of its wave III down. This pattern maintains silver's potential to remain over the 16 region. However, should we see it follow through in the same way as GLD, then it truly opens the door to the 11-14 region in the mini silver futures contract I've discussed in the past. But again, that makes this pullback a likely wave 2 of larger degree and sets us up for a major wave 3, which is calculated to take silver well over 100. So, although there would be more pain to those who have held their long positions, the upside potential becomes that much greater into the future.

See chart illustrating wave counts on gold and silver here.

Editor's note: Avi Gilburt is author 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. His Elliott Wave analysis appears frequently on several financial news sites.

Read more:

Is 1900 Out of the Question Now?

1900 Still Not Out of the Question

No Upside Follow-Through Yet
< Previous
  • 1
Next >
No positions in stocks mentioned.
Heed the Downside Setup in Silver and Gold
Investors looking on the long side of this market should note this setup, even if they don't trade it.
Avi Gilburt    

I've seen many interpretations of where the metals market stands at this time. Many are bullish, some are rather neutral (expecting more chop in this region), and very few are truly bearish and expecting levels below the 2013 lows. And, as you know, my current perspective remains in the minority.

Yet when the market continues to subdivide to set up what I now view as the potential for a wave 3 of (iii) of III, we don't often get this much warning of a potential "crash" like move in the metals. Why one wouldn't respect this setup and view this potential fearfully (if long) actually surprises me. So my main message this week to all those who are looking on the long side of this market is to at least respect this downside setup, even if you're choosing not to trade it.

From an Elliott Wave count perspective, this past week we had a nice micro 5 wave structure down from the 127 resistance region, which means we should now see a wave 2 corrective rally into early next week. And, as I've maintained for the last several weeks, as long as we remain below the 127 level, this market is set up for what many may consider the next metals "crash." That's what a wave 3 of (iii) of III should feel like, and this is where we can see $3-$4 moves down (or more) in the SPDR Gold Trust ETF (NYSEARCA:GLD) per day, and $30-$40 moves down (or more) in gold.

My alternative count has wave 2 just about completed on Friday, which means early next week we begin that downside phase. But take note that I can't have any bullish alternatives until the 127 level is breached, especially when this pattern to the downside is now set up as dangerously as it currently seems.

Also, if you look at the 144-minute chart (see link at bottom of article), I've provided a "proposed" path for how GLD could drop in five waves into the summer to complete this segment of the three-year-plus correction.

As for silver, I'm going to maintain the same micro count at this time, except that I'm going to try to maintain the ending diagonal potential for the bigger five wave move down. That means we're now in a 1-2 setup in a c-wave of its wave III down. This pattern maintains silver's potential to remain over the 16 region. However, should we see it follow through in the same way as GLD, then it truly opens the door to the 11-14 region in the mini silver futures contract I've discussed in the past. But again, that makes this pullback a likely wave 2 of larger degree and sets us up for a major wave 3, which is calculated to take silver well over 100. So, although there would be more pain to those who have held their long positions, the upside potential becomes that much greater into the future.

See chart illustrating wave counts on gold and silver here.

Editor's note: Avi Gilburt is author 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. His Elliott Wave analysis appears frequently on several financial news sites.

Read more:

Is 1900 Out of the Question Now?

1900 Still Not Out of the Question

No Upside Follow-Through Yet
< Previous
  • 1
Next >
No positions in stocks mentioned.
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