Final Run To Lower Lows Setting Up
The wave structure for the last few months has been quite challenging, to say the least. However, the one constant has been that the market has unfinished downside business to which it will likely attend before we can begin to look significantly higher. The question has always been “how?”
This past week, when the market chose to not take this corrective rally higher, it may have provided our answer. With the more complex w-x-y pattern seemingly completing this past week, and with what seems to be a nice 5 wave structure having developed to the downside in GDX, it looks like we have our set up for the final drop.
As you can see from the 8 minute GDX chart, we have 5 waves down from the past week's high. The rally off that low has been quite corrective looking. So, the only question now is if the rally was all of wave (2), or just the a-wave of wave (2). Since it did not even retrace to the .382 retracement level, standard expectations suggest that it was only the a-wave. However, since the target for this set up with the top to the wave (2) being in place takes us towards the 9.65 target we will likely strike in this set up, it is certainly possible that all of wave (2) is complete. Breaking below the market pivot on the 8 minute chart without being able to move back over it is confirmation that we are likely heading down to the 9.65 region to potentially complete this 4+ year correction.
The targets in the GLD at the 2.00 extension in this same set up is in the 97 region, whereas an extended 2.618 extension suggests just below the 95 level. In silver, the same extensions point towards the 12.90-13.10 region.
So, while we have been ever so patient in waiting for the market to complete this long term correction, it seems to be setting up the final run to lower lows. The only question now is if it will finally follow through on the current set up. That answer may be seen in the coming week.
See charts illustrating the wave counts on the GLD, GDX, and YI.
Jan 16, 2016
Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net, a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.