I'm going to repeat (again) since my readership is growing rapidly that I do not profess to know the future or to have a crystal ball. The market is a living organism made up of hundreds of millions of cells known as people. You cannot perfectly predict the course of life unless you are God and we are not. But as a living organism the market has needs and must always nomadically wander to fill them. Change is the only constant here and the EW principle is useful for helping to determine the path the herd might likely take in order to fill these needs. So it's always about improving your odds and never about providing certainties.
In the case below, the market has not committed itself to the 5th wave up yet because 1) it has not moved 5 waves up off the bottom 2) it has not broken out the top rail of the falling wedge and 3) always be wary of a 3 wave move up to the level of the prior 4th. The first confirmation of breakout would be 5 waves up and right now we only have 3. This could in fact fall to a slightly lower than today's low making what I have marked as red e actually red c. That indeed could happen. I don't think it will which is why I bought half a position of JNUG this AM. But I did not follow through and load up fully at the end of the day because I did not get the first confirmation that a breakout has occurred.
I'm hoping that tomorrow we go up and kiss the upper rail from below to form the very first tiny wave 1 up and then fall back to 115.80 as the wave 2 low only to reverse strongly and smash out of the top rail as wave 3 unfolds. I will be there with finger on the trigger to load up on JNUG should we see that kiss and then 3 wave pullback. Likewise, if GLD moves below 115.25 I will bail out and see if I can get a lower buy in price.
Once we break out the top rail (preferably during the 3rd wave up), wait for the pull back and then load up. Always use intelligently, EW-based stops!
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