Originally published on Sat Oct 19 on ElliottWaveTrader.net: With RGLD following through to the downside as expected in its c-wave decline, the question we are left with is if there is any more weakness to be expected in the metals complex before we begin the next major rally phase?
The simple answer is that while the patterns still suggest that a lower low can still be seen, it is not something I would be suggesting you trade for in an aggressive fashion.
You see, many of the patterns we track across the complex still do not look complete to the downside. While quite a number the structures have morphed into a complex downside corrective structure, it is still quite reasonable to expect one more bout of weakness over the coming week or so before this correction/pullback runs its course.
What bolsters this perspective even more is that the rally off the lower lows struck this past week do not really look impulsive in many of the charts. This suggests that the rally we experienced in the last half of the week was likely corrective in nature And, this supports the potential for one more bout of weakness to be seen before the next rally phase takes hold.
However, I want to warn you that only the most nimble of traders should be attempting any short trades at this time. Rather, most of our members, who are focused upon the longer-term perspectives, should be more focused upon layering into long side positions. Most specifically, once the market does see the next impulsive 5-wave structure rally, you should be quite alert to the potential that the market is setting up to break out in its next rally phase.
As I have also noted before, while it is certainly possible that this pullback is a 4th wave off the 2018 lows, which is actually how I view the GLD and RGLD charts, many of the charts that I track count best as this being a wave ii in a 3rd wave. That means that the next rally in many of the charts can actually be the heart of a 3rd wave. So, I would be trying to focus more about those charts with greater potential, such as NEM over the coming months.
In conclusion, if the market is going to see those lower lows, I think it will be something we should begin to see early in the coming week. If that should not be the case, then I think the probabilities to see for those lower lows will likely be diminished, as the market has potential to complete its initial 5-waves up off the recent lows struck. So, please stay nimble and begin to focus upon the long side of the market as we seem to be nearing the end of this pullback/correction.
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.