Below is the general model I am following for gold. The B wave looks like an ending diagonal to me and 5 rail bumps have now completed. This is not EWI's primary model so I could be all wet here but markets like to do the unexpected so I am placing a bet on a few weeks rally in GLD.
Of course, I'm playing it via JNUG whose general shape should be like this. I think wave 1 and 2 (not specifically marked but should be obvious) of C are now done:
I bought near the close after that scary looking drop which could not break below the prior low. This is a great opportunity because of the small spread between buy price and stop price. It gives the chance for a bet with asymmetrical risk in my favor. If I'm right (and we won't know until tomorrow) then wave 1 and 2 have transpired and tomorrow should be a big move up for metals and miners. If not I lose a tiny bit when I get stopped out. These are the real value propositions of EW IMO, picking entry points and setting stop loss triggers. In other aspects of it there is too much art. But when I buy something knowing what my max loss is likely to be if I'm wrong about the turn, that is not art. That is logic and so it is repeatable if discipline is employed. Of course, they could also gap it down 10% at the open tomorrow thus increasing my loss well past my pain point but this wave sequence already had its gap down 3rd wave at today's open so it is much less likely to gap down again tomorrow. I might lose on this trade but I like my odds and that makes it a smart gamble regardless of the outcome.
