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Questionable Downside Set-Up For Silver And Gold

Published 10/28/2014, 01:15 AM
Updated 07/09/2023, 06:31 AM

“You got to know when to hold them, know when to fold them, know when to walk away, know when to run.”

Yes, Kenny Rodgers’ words actually represent wise advice to traders who are willing to listen. Many may not realize this, but the best traders are not in the market 100% of the time. They are not in the market 80% of the time. They are not even in the market 50% of the time. Rather, the best traders pick and choose their trades very carefully and enter trades only when the greater probabilities are on their side.

So, when I tell you that I do not have a trade in metals before me where I can say I have a greater than 60% probability of being right, it tells me to tread cautiously and not attempt to force a leveraged trade when one really does not exist, in a high probability sense.

While I will tell you how I see the various possibilities in the market at this time, please understand that I am uncertain of the next immediate move in the metals until I see a little more price action to discern which wave degree is best represented.

First, the cleanest perspective to me is in silver at this time. It has an immediate bearish count on the chart, which presents as wave 4 in purple having topped, followed by a 1-2 (with a leading diagonal for 1) i-ii set up. Assuming we see a strong break down below 17 early next week, we should be headed to a minimum target of the 16.64 region, with an ideal target of 15.70. Resistance for this count is 17.45-17.58. Should 17.58 be taken out to the upside, it places me squarely in the wave IV count.

If I were to assume the same set up is present in Gold, it would mean that we should not be seeing GLD over the 119.50 level, and setting up for the heart of a 3rd wave down to take out the 2013 lows.

Should the metals take out their resistance before breaking support, then I would be looking for silver to target the 18.15-18.40 region, whereas GLD will be targeting the 122.50-124 region next.

So, over the next few days, I will be watching these support and resistance levels very carefully to give me a clue as to the next move in the metals. But, as I have been saying for months, I am still expecting another drop in the metals whether it begins immediately, or it takes another month or two.

As a side note, for those of you who are not in our Trading Room regularly, I want to take a moment to announce to you the addition of Larry White to our professional staff at Elliottwavetrader.net. Many of you may know Larry as a member of our Trading Room for the last several years, during which time he has provided some incredible analysis on various mining stocks, as well as the mining ETF’s. Larry will be providing continual and detailed coverage of individual charts of the stocks that make up the GDX  and larger holdings in the GDXJ ETF’s.   By doing so,  Larry can assist us in picking the best of those charts to set ourselves up to outperform the GDX and Market Vectors Junior Gold Miners (ARCA:GDXJ) once the next multi-year bull phase begins in the metals world as we move into 2015.

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