Towards the end of last February, the 27th to be exact, we posted an update of the GDXJ-Junior Gold Miners ETF showing how it had just ended a strong 5-wave impulse upswing at $43.01 from December’s low. This was providing confirmation of upside continuity in the future, that this initial five wave impulse was simply the beginning of a much larger, multi-year uptrend – a 1st wave.

But before that can continue, in compliance with Universal Law, action must be followed by reaction.  In the GDXJ’s case, a counter-trend decline must begin to unfold. R.N. Elliott’s guideline is that a correction commonly returns to the area of ‘fourth wave preceding degree’ which is around the $36.08 area – see chart. Whilst corrections can end into this minimum area, they can also extend beyond, or lower. This all depends on the depth of the preceding fourth wave in relation to the fifth and the labelling of the preceding impulse.

GDXJ

In this specific case, the GDXJ was beginning a correction as a 2nd wave. In fact, 2nd waves are notorious for unfolding far deeper than simply levels at fourth wave preceding degree. Anticipating such declines are really dependent on how the initial stage of the correction unfolds. If declining into a five wave pattern as it did to $32.66, then we already know that another deeper part of this correction is taking place, eventually taking the form of a 5-3-5 zig zag.

 

Why Fib-Price-Ratios are the key to forecasting termination levels for Zig Zag Patterns

This is where fib-price-ratios are crucial in measuring the termination level of the zig zag. There are various ways to accomplish this but one of the most common ratios is well-known – where waves ‘a’ and ‘c’ measure to quality, or by a fib. 100% correlative ratio. As you can see from the chart, this was zig zag perfection because this ratio projected a terminal low to $29.29+/- with the actual low coming-in at $29.33!

The $29.33 low as this 2nd wave was also testing the fib. 85.4% retracement of its 1st wave predecessor [100-14.58 = 85.4]. When pattern meets fib-price-ratios and prices respond by trading higher afterwards, it confirms a ‘reversal-signature’ or a trend reversal. And so in terms of probability, this set-up is about as good as it gets – risk-reward is excellent basis negation below 29.33 - the prevailing, dominant uptrend is expected to resume higher now.   

 


Subscribe and get the latest forecasts on Stocks, FX & Commodities – NOW!

WaveTrack International and its related publications apply R.N.Elliott's "The Wave Principle" to historical market price activity which categorises and interprets the progress of future price patterns according to this methodology. Whilst it may be reasonable to deduce a course of action regarding investments as a result of such application, at no time or on any occasion will specific securities, futures, options or commodities of any kind be recommended for purchase or sale. Publications containing forecasts are therefore intended for information purposes only. Any opinion contained in these reports is only a statement of our views and are based on information we believe to be reliable but no guarantee is given as to its accuracy or completeness. Markets are volatile and therefore subject to rapid an unexpected price changes. Any person relying on information contained in these reports does so at their own risk entirely and no liability is accepted by WaveTrack in respect thereof. © All rights are copyrights to WaveTrack. Reproduction and / or dissemination without WaveTrack's prior consent is strictly forbidden. We encourage reviews, quotation and reference but request that full credit is given.

Recommended Content


Recommended Content

Editors’ Picks

USD/JPY pops and drops on BoJ's expected hold

USD/JPY pops and drops on BoJ's expected hold

USD/JPY reverses a knee-jerk spike to 142.80 and returns to the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.  

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold consolidates near record high, bullish potential seems intact

Gold consolidates near record high, bullish potential seems intact

Gold price regained positive traction on Thursday and rallied back closer to the all-time peak touched the previous day in reaction to the Federal Reserve's decision to start the policy easing cycle with an oversized rate cut.

Gold News
Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

In its Consensus Layer Call on Thursday, Ethereum developers decided to split the upcoming Pectra upgrade into two batches. The decision follows concerns about potential risks in shipping the previously approved series of Ethereum improvement proposals.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures