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First published on Wed May 16 for members of ElliottWaveTrader.net: As the title notes, we are finally getting that 5thwave down in the GLD after weeks of meandering. Moreover, not only are we getting that 5thwave down, the 3rdwave within this 5thwave down extended beyond the 3.618 extension of waves i and ii down. And, such a strong extension is certainly doing its job in getting even more people souring on this complex.
Moreover, as I am reading out there in the blog-world, it seems many are turning quite negative with gold breaking below its 200DMA. Clearly, this is EXACTLY what we want to see to strike a bottom in the complex.
As you can see from the daily chart, the RSI has dropped down to the levels from which all prior rallies have begun. Furthermore, the GLD is now below its daily Bollinger band, yet the MACD on the daily chart is providing us the positive divergences we want to see in this 5th wave of the c-wave of wave (2).
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What is likely happening here is that SPX is doing an ABC retracement while forming a bull flag to go higher. Wave A was the first leg down and wave B was likely the rally into the lower high that we have seen so far. What we should see next is the C leg down below the wave A low, possibly extending as low as the daily middle band in the 2679 area, before the next leg up on SPX.
However last year that’s not the way this worked. The uptrend was so strong that every time the moment came for a second leg down, SPX broke up instead. That was the 2017 playbook and I’m not expecting to see that here, but it’s on my mind as a possibility.
Full Intraday Video from theartofchart.net – Update on ES, NQ and TF, and CL, NG, GC, HG, ZB, KC, SB, CC, ZW, DX, EURUSD, GBPUSD, AUDUSD, NZDUSD, USDJPY, USDCAD: (more…)
In sharp contrast to the likes of, say, small cap equities, one financial instrument which has been reliably sliding, week after week, month after month, continues to be the emerging markets bond fund. I have managed to lay out five successive horizontal lines indicating its diminishing levels of price resistance (typically based on a gap down).