-- Published: Tuesday, 28 April 2015 | Print | Disqus
By Avi Gilburt
First published Sat Apr 25 for members: I would like to start this weekend update by pointing out something that probably eluded many market participants. With the metals pulling back this past week as we expected, I am sure many would have expected that the dollar to have rallied. Yet, if you look at the dollar chart, it has also dropped below its lows of last week. Yes, folks, both the dollar and the metals dropped this past week.
While many firmly believe that when one moves, the other moves inversely, over the last several weeks, I have been trying to present evidence that this is simply not the case. While there may be times such moves coincide, if you had attempted to trade based upon this supposed inverse relationship, the end of 2014 into early 2015 would not be a good time period for your trading account.
Last weekend, after the market was unable to capitalize on several breakout set ups, I noted:
“With the metals unable to take advantage of an immediate break out pattern they had this past week, it suggests that downside may be seen before the next rally takes hold.“
In fact, I noted I can see the potential for silver to break the 16 region before we bottom in this corrective pullback. For the last three days, we have been hovering around the 15.80 level that I ideally did not want to see broken (which was noted several weeks back). However, it does seem as though silver did extend a little more than I expected, but, even so, I cannot get wholly bearish this complex.
The GLD came right down to the wave 2 target I had last week on the chart, which was within the region of the .618 retracement of the prior rally. As long as we maintain over 111.70, I am going to expect a rally to begin in the very near term in the metals. Once we see confirmation that the bottom is in, I will send out a Market Update in our trading room with the expected target regions for the rally.
As I have been saying for the last several weeks, the market almost needs to rally in order to raise market sentiment to levels that can support the type of decline to lower lows which we expect. And, with the drop we experienced over the last week, many are starting to become even more bearish, and looking for immediate new lows. So, in my humble opinion, until we see a strong rally, I am unable to become immediately bearish in this complex, and will maintain my short term (next two months) bullish perspective unless it is clearly proven to be wrong.
See Avi’s charts illustrating the wave counts on the metals below:
Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.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.
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-- Published: Tuesday, 28 April 2015 | E-Mail | Print | Source: GoldSeek.com