GDX: The recent advance over the past 10+ trading days has been quite overlapping and suggests in our opinion an Ending Diagonal Triangle (EDT) for a 5th wave is forming. it appears to ideally target low $20s, but could even be down at today’s high. This would mean that price will drop back to the start of the EDT: mid-$15s. Cont’d below.
We can still see the negative divergence with price on the daily RSI5 and MACD histogram, suggesting the uptrend is loosing momentum. Ass uming a top at the low $20s, S/R level, we can see that the 50 to 61.8% retrace is at $16.20-$15.29 and thus right around the EDT beginning. Hence, we have several lines of evidence pointing towards a trade-able low in that area.
UCO: As with GDX, UCO’s advance since mid-february has also been rather overlapping, but could have been a leading diagonal triangle. This is opposite to an EDT, as the EDT is ending, whereas an LDT is the beginning. Note the big volume coming in, and how price has moved out of the large (blue) EDT, where it found support mid-February. There’s plenty of positive divergence on the TIs, but the wave count suggests we may need one more wave down. Cont’d below.
The wave count shows that indeed UCO has moved out of the larger EDT, but is now likely forming a smaller edt (in red). Lots of triangles in this update ;-). This EDT seems to suggest $5.50 would be a sweet spot for UCO. If price does happen to move over the upper red trendline at any time going forward the low is in. That simple.