Gold pull back by the numbers

Gold is pulling back hard, just like silver is right now.  I am optimistic but cautious about this move.  I expected one more small move up before finishing what I thought would be the first wave of a new bull market for both of these metals.  Instead, we got a big gap down in both albeit on about normal volume in both cases.  So I think both charts are in a wait and see mode before determining if this is wave 2 down that will eventually reverse itself after shaking all the weak hands and then break out with a monster 3rd wave up OR whether it will form a 3 wave step to the bottom of the Wizard's sleeve below $1000 (which would then be the buying opportunity of the decade IMO).

What I find interesting about the GLD chart is all of the invisible but real technical support and resistance lines.  The lower green line of the parallel channel was not drawn to match the place where the chart paused.  In fact, quite the opposite.  I drew exactly parallel lines once I saw the chart peak at the down sloping red line and the herd, which I think is increasingly made up of trading computers, paused at before determining whether to break out or break down.

When the break down did happen, the gap didn't just appear anywhere.  It gapped to just below the 38.2 fib.  Again, this is a value that is calculated in advance, not drawn in once the chart has made its move.  Likewise for the 50% fib.  It's like the herd makes a move and then stops and looks around to see what the rest of the herd is doing.  If the rest of the herd still looks nervous, the herd moves in the same direction another "herd quanta".

The way this is falling reminds me of a vee style retracement which is very common to 2nd waves.  In fact, the typical Elliott Wave motive wave has a first wave up, a vee style wave down, a massive 3rd wave up which includes gaps followed by a sideways correction into wave 4 (which often takes the shape of a triangle) followed by the 5th, exhaustion wave.

The most common retracement wave also has an a-b-c shape where A is 5 waves, B is 3 waves and C is 5 waves.  In this formation, C is usually the strongest wave and there is often a big gap associated with the 3rd of C.  So do we possibly have that so far with GLD?  To be honest I have looked at it and I do not see the pattern yet.  So, again, I think we have a wait and see here. 

One possibility that would not surprise me at this point would be a bounce off the 50% fib back up to test the 38.2 from below and then a trip down to the 61.8.  But I have nothing to base this on except for having seen it before in circumstances like this.  It's almost as if false signals are being generated on purpose.  In times like these, dollar cost averaging for the long term is a winning strategy.  They only bother to send out false signals if the stakes are high IMO.  It is not free to manipulate markets and you always take the risk that someone big will call your bluff.