The time scales are, unfortunately a little different, ABX’s is much longer but you get the point. Just superficially I could come up with a multitude of counts, at least four in these two charts. No idea which one is the best but the one in green seems to have the most followers right now. Most importantly, apart from a slight immediate drop, the next bigger move for all of them is up not down. Playing it from the long side appears to be the way to go. For ABX it might pay to wait for $18,$17 or something like that first.
In our most recent blog we had ABX as a sell around $30. Well here we are now;
We are well on our way to the target (see previous blog). Look for C=A, base of diagonal wave 5 at just a little above $16 and 61% retracement of the $8 to $30 leg which is somewhere between $16 and $17. Also the RSI should be below the 30% line.
See also all previous blogs. This is one of our best calls, however there was one big mistake and that is that we expected a much deeper pullback for wave B. It just did not happen, perhaps because the world was in a hurry to get back into what they had sold only a few months ago. We are now just a few dollars shy of our target and would be inclined to sell if we still owned this stock.
Wave C is now equal to A and has taken on the shape of a diagonal, a pattern that is usually reversed to its starting point or below. There is no rational reason why this stock should have appreciated almost 4-fold with gold at about $1360 or so. At this price gold should be well above $1500 or higher particularly in an environment where the US$ is rising. A sell.
ABX has moved up at a much faster speed than we ever expected. Typically there should be a noticeable pause somewhere, usually near the middle, of the counter-trend correction. We have now almost retraced 50%, far more than most other gold stocks so we have to assume that our analysis was wrong.
Initially we expected a pull back after the first leg up to about $17. What may have happened is that the pull back (wave b in an a-b-c) simple moved sideways rather than down. Possible this was an expanding triangle wave b that lasted about 5 weeks. If c started from that low point, equality between c and a would get us to somewhere near $28/$30 in the next few days, if not done already. If so this correction would have lasted about 8 months which is very short compared to the 4 years it took for the stock to find a bottom.
By comparison we show the ZJG, the BMO junior gold ETF.
This one is also on a semi-log scale but the stock only just made a 30% retracement. Clearly ABX is ahead of itself and today’s action up $2 in the morning (when the charts were made) and down $2 in the afternoon may be a warning that it is peaking at some degree.