COMMODITY OUTLOOK Base Metals | Precious Metals | Energy - … · 2019-04-02 · 3 WaveTrack International GmbH Kanalstr. 14 80538 Munich Germany Phone: +49-89-21020711 Fax: +49-89-92185245

WaveTrack International GmbH Kanalstr. 14 80538 Munich Germany Phone: +49-89-21020711 Fax: +49-89-92185245 E-Mail: [email protected] www.wavetrack.com

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MONTHLY UPDATEBAsE METALs | PrEcIOUs METALs | ENErGYDEcEMBEr 2018(data through 26th November 2018

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TABLE Of cONTENTs {click on TOC text!}

APPENDIX - {click on TOC text!}

IN THIs EDITION

The Us$ DOLLAr has held up close to this year’s highs during the last month which has created headwinds for most of the major commodity markets.

The other negative aspect is uncertainty surrounding the up-coming trade-tariff talks between the U.S. and China at the G20 meeting in Buenos Aires, Argentina at the end of November. But there’s also a growing concern about a slowing of growth in developed economies.

Despite strong stock market declines in October, we remain more optimistic than current bearish sentiment figures show – but amongst more positive forecasts in U.S. indices, commodity markets remain under pressure.

BAsE METALs are still engaged in counter-trend declines that began earlier this year and have yet to reach Elliott Wave downside targets before resuming ‘Inflation-Pop’ uptrends

– this month’s report takes an updated look at just how far away prices are in reaching optimum downside targets.

PrEcIOUs METALs have mostly remained locked into the final stages of 2½-year counter-trend declines but are also some months away from reaching downside price levels that signal a return to a more sustainable uptrend.

And then there’s crUDE/BENT OIL – these two contracts broke integral support levels earlier last month which triggered a wider sell-off with Crude oil down -35% per cent from its October high.

BUT WHAT DOEs THIs MEAN?- are prices now in a secular downtrend or have they a chance of trending higher next year? – we take a look!

IN THIs EDITION » ...................... page 1

HIGHLIGHTs » .............................. page 2

OvErvIEW » .............................. page 3

BAsE METAL MINErs » .. page 5

BAsE METALs » ...................... page 5

PrEcIOUs METALs » ......... page 9

GOLD MINErs » ................ page 10

MINING sTOcks » ........ page 12

ENErGY » ................................... page 14

fig. #1 US-Dollar Index - Daily » ........ page 17fig. #2 US-Dollar Index - Cycle » ....... page 17fig. #3 CRB Cash Index - Daily » .......... page 18fig. #4 Copper - Daily - Cycle » ........... page 18fig. #5-#6 Copper - Daily » ................... page 19fig. #7 Aluminium - Daily » ................... page 20fig. #8 Lead - 540 mins. » ....................... page 20fig. #9 Lead - Daily » .............................. page 21fig. #10 Zinc - 540 mins. » ...................... page 21fig. #11 Zinc - Daily » ............................ page 22fig. #12 Gold - Daily - Cycle » .............. page 22fig. #13-#14 Gold - Daily & #2 » ......... page 23fig. #15 GDX Gold Miners Index » ..... page 24fig. #16 Amer Barrick - Daily » ............ page 24fig. #17 Randgold - Daily » ................... page 25fig. #18 Newmont Mining - Daily » .... page 25fig. #19-#20 Silver - Daily » ................. page 26fig. #21 XAU Gold/Silver Index » ........ page 27fig. #22 Platinum - Daily » ................... page 27fig. #23 Palladium - Daily » ................. page 28fig. #24 XLE Energy - Daily » ............... page 28fig. #25-#26 » Crude Oil - Cycle & Daily . page 29fig. #27 Crude Oil - Weekly » ............... page 30fig. #28 Crude Oil - Monthly - #2 » ..... page 30fig. #29 Brent Oil - Daily » ................... page 31

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»HIGHLIGHTs

BAsE METALs » – Copper remains in a tight range and remains in a holding pattern prior to another downswing forecast into year-end/early New Year as it enters the final phase of counter-trend declines that began last June. Downside targets remain towards 5290+/- or about -14% per cent below current price levels. Lead and Zinc remain under pressure but are expected to hold above the August/October lows to complete a counter-trend rally before heading lower into year-end/early-2019. Larger counter-trend declines that began earlier this year remain incomplete

– Lead is forecast down towards 1686+/- and Zinc towards levels at 1925+/-.

PrEcIOUs METALs – » Gold and silver are dominated by the US$ dollar’s movement and direction and whilst the current forecast for the US$ dollar depicts a short-term dip of minus -3.8% per cent, this could change quickly if the index breaks overhead resistance above November’s high of 97.69. Should it do so, gold and silver will undoubtedly decline too in a final sell-off which represents the concluding sequence of a 2½-year counter-trend downswing. Since October, a negative correlation is evident with U.S. stock markets, so even if the dollar does undergo a shorter-term decline, gold could follow lower too as stock markets begin to recover from recent declines as investors unwind safe-haven strategies. Gold is forecast down towards 1122.98+/- and silver towards 13.13+/- prior to huge uptrends that are forecast through 2019-2020. Platinum is set to trade lower in December, as is Palladium as the latter unfolds into a shorter-term counter-trend pattern targeting 1035.00+/-.

ENErGY – » Last month’s downside targets for Brent/Crude oil towards 62.15+/- and 68.10+/- seemed ambitious but prices have collapsed past these levels to 50.10 and 58.40 respectively. This confirms the October highs ended 3-year cycle degree zig zag patterns at just below original upside targets forecast last January. This action also confirms cycle wave X declines have begun with recent lows ending the first price-swing within corrective zig zag patterns. A sizable corrective ‘B’ wave rally is set to begin now, lasting through December. But as 2019 gets underway, we expect another similar sell-off as wave ‘C’ before prices form a foundation that begins the next major advance as part of the ‘Inflation-Pop’ uptrend.

LIvE-UPDATE-fOrUM

The Live-Update-forum (LUf) is our conference-call access point to ensure we communicate the most important aspects of market price development directly to you! There are some amazing changes on the horizon, many of which feature in this month’s EW-Commodities Outlook - but quite often, intra-month changes occur – to gain access, why not upgrade your subscription by adding the LUF conference-calling service? – contact us now for details | [email protected].

EDITOr’s NOTE

THE ELLIOTT WAvE cOMMODITIEs OUTLOOk is WaveTrack International’s monthly analysis that updates the location of current price-trends of Base Metals, Precious Metals and Energy contracts across several time-periods. Price forecasts are dynamic in nature because they utilise non-linear methodologies that originate from the disciplines of the ‘Natural Sciences’ – these incorporate the timeless rhythms of growth/decay, action/reaction, progress/regress whilst adding methodologies of measurement in the form of geometry, timing with cycle theory and repetition of pattern with the Elliott Wave Principle. These combined offer a true and accountable insight into future price-trend development – for more information, please contact us or alternatively, visit www.wavetrack.com – sincerely, Peter Goodburn.

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The 2nd phase of the ‘INFLATION-POP’ began in January/February 2016 when corrective declines in developed markets formed synchronous lows with Emerging Market and Commodity corrections that began from the year-2011 peaks. We termed this as the grand ‘rE-sYNcHrONIsATION’ lows. This is why significant price rises have followed, continuing the secular-bull uptrend for stock markets whilst beginning the next but last phase of inflationary price rises for EM’s and Commodities.

This second phase of price rises are typically, but not exclusively unfolding into five price-swings or waves, 1-2-3-4-5 over a period of several years, into the culmination of the next cyclical peak due around the early part of the next decade, years-2020-22. So far, wave 1 ended its advance in Base Metals having taken two years to develop into January/February 2018’s highs. This has since given way to a period or regression or correction in wave 2, a necessary function before prices can resume higher in wave 3 and so on. Wave 2 is currently in downside progress from recent highs, for Copper, and the rest of the base metals group.

The progress of the ‘Inflation-pop’ for precious metals is somewhat different. It too will succumb to the gradual build-up of inflationary pressures which maintains it within the overall schematic, but its Elliott Wave pattern progress is different to base metals which means it will temporarily disengage its positive correlation until such time when 3rd waves begin, a time which depicts the most ‘expansive’ period of rising inflationary pressures. We don’t expect that to begin until the current 2nd wave phase has completed later this year, late-2018/early-2019. There exist some alternate bearish counts for Gold and Silver which otherwise depict the end of their super-cycle uptrends into the year-2011 highs – these forecasts can be viewed in the Elliott Wave Forecast database (access with this report).

When comparing underlying industrial commodities like Copper and inflationary sensitive measures like Gold with economic driven commodities like Crude/Brent oil, we again see some short-term dislocation but overall, fitting the ‘inflation-pop’ schematic. Crude/Brent oil are ultimately heading for new record highs as part of the 2nd phase of the inflation-pop, but this isn’t expected this year.

OvErvIEW

The following overview provides a schematic of price-expectancy for the pre/post-financial-crisis recovery since year-2008/09. We shall repeat this in each monthly report to ensure the themes are understood by new subscribers.

Almost all commodities ended super-cycle uptrends around the year’s 2006-2008 – we define the super-cycle uptrend not from the 1999 lows as is generally considered in the financial industry but from the ‘Great Depression’ lows of 1932. This is because most commodities reached all-time lows at that time, even lower than levels traded several hundred years earlier and this provides a strong basis for historical Elliott Wave analysis. The subsequent uptrend from 1932 low unfolded into a five wave impulse pattern into the 2006-08 highs, for benchmarks like Copper and Crude oil. The financial crisis that developed afterwards is simply the 1st phase of a multi-decennial corrective price decline that ended into the late-December/early-March lows of 2008/09.

The post-financial-crisis recovery is the 2nd phase of the super-cycle correction which is capable of pushing many commodities into new record highs – this phenomenon is not recognised in con-ventional fundamental/economic or even techni-cal analysis because analysts see this as part of the previous super-cycle uptrend – but the Elliott Wave Principle specifically identifies such price developments alongside pattern identification methods as the 2nd phase of the multi-decennial correction locating the second sequence of an ex-panding flat pattern, A-B-C, 3-3-5.

This 2nd phase of the expanding flat can be broken down into a three price-swing event, up-down-up until prices reach new record highs. We know markets adhere to ‘fractal’ qualities of subdivision and this is a good example. The A-B-C pattern is known as a zig zag and given the term of an ‘INfLATION-POP’ because it will undoubtedly trigger a resurgence of inflationary pressures by the time prices reach new record highs.

There are three price-swings attributed to the A-B-C zig zag pattern where wave A represents the 1st stage of the INFLATION-POP and wave C as the 2nd phase. The 1st phase ended wave A into the 2010-11 highs, the 2nd phase as wave C began from the Feb.’16 lows.

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It began this sequence at the grand ‘RE-SYNCHRONISATION’ lows of January/February 2016 but is unfolding into a seven price-swing sequence which is labelled A-B-C-X-A-B-C, or in Elliott Wave terminology, a double zig zag. The first cycle degree zig zag, or A-B-C ended last October (2018) and is currently being balanced by an ‘X’ wave correction into Q1 2019. Once completed, the next A-B-C zig zag pattern can get underway lasting through to the next cycle-peak due in 2021 attaining record highs.

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Us-DOLLAr OUTLOOk

This year, 2018 will be remembered for the Us$ DOLLAr’s recovery period following 2017’s minus -15% per cent decline. But the dollar rally has yet to complete to the upside from last February’s low of 88.26. It’s been a prolonged secondary correction within the new 7.8-year cycle downtrend with August’s high at 96.98 marking the end of a three-wave zig zag correction, minor wave a. – see fig #1. Minor wave b. is expected to develop into an expanding flat pattern to the downside targeting levels towards 92.63+/- before minor wave c. finishes the overall 2nd wave rally at 99.91+/- or 100.54+/- something over the next few months.

Last month’s report indicated minor wave b. would develop high targeting 97.63+/- before staging the downside attempt to 92.63+/- as part of the expanding flat.

Fast-forward to today and we see this upside target reached to 97.69 and a subsequent decline that so far, begins the attempt to 92.63+/-. So this remains valid through December and into Q1-2019.

But what happens if the resistance at 97.69 is broken to the upside? This is not what we expect, but should it jump higher, then it would otherwise confirm minor wave c. has a more immediate and direct route to 100.54+/-.

The current forecast to 92.63+/- represents a -3.8% per cent downswing – is that going to help pull commodities higher during the next month? It certainly can, although Base Metals are already poised to resume counter-trend rallies that began from the August/October lows whilst Precious Metals remain in a short-term limbo. Crude and Brent oil have been hit so hard during the last month that any dollar downswing would certainly help stem the recent tide of declines, triggering a counter-trend rally.

The daily US$ dollar index composite cycle has been updated, showing a downturn for the US$ dollar from Nov.’s secondary peak – see fig #2. So this does look like some downside pressure will exist through to year-end, at the very least. Note how the composite cycle is already turning down for a lengthened period into May ’19 – we don’t expect this from an Elliott Wave perspective because of the incomplete zig zag but what this does tell us is that wave c.’s advance to either 99.91+/-, or 100.54+/- will be a short-lived affair.

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fig. #1 US-Dollar Index - Daily

fig. #2 US-Dollar Index - Daily - Composite Cycle - CycleTechPro 2.0.0 – © 2018

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crB-cAsH INDEX

The crB-cAsH INDEX has failed to develop higher from the mid-August low of 393.50 as a five wave impulse pattern that is required for additional confirmation that overall corrective declines as intermediate wave (2) ended from the July ’16 peak of wave (1).

The following advance has at best, unfolded into a 1-2-1-2 sequence with declines from 421.86 labeled as another 2nd wave correction targeting 400.80+/-. See fig #3.

It seems unlikely to break below the August low because, at that point, wave (2) fulfilled the requirement of ending an a-b-c, 3-3-5 running flat pattern. Minor wave c.’s decline from 443.01 into the mid-August low of 393.50 can be seen subdividing into a required five wave impulse pattern, 1-2-3-4-5.

The following rally to 421.86 cannot be subsumed into this pattern – it just doesn’t fit leading to the assumption that wave (2) ended at 393.50 with the initial sequences of a new bull market uptrend for wave (3) now underway.

Revision will only come should price extend below 393.50 but this seems less probable that our bullish signal – even if the index did edge lower, the larger uptrend remains intact.

BAsE METAL MINErs XME | cOPX

Existing downside targets for the XME METALs & MINING INDEX and Copper’s cOPX MINING INDEX remain unchanged towards 24.12 (-16%) and 15.95+/- (-17%) respectively – for Elliott Wave updates, please log-in to the EW-Forecast database.

BAsE METALs cOPPEr | ALUMINIUM | LEAD | ZINc

cOPPEr is set to continue this year’s corrective downswing through to year-end and across into Q1-2019 although a short-term rally could stretch the mid-August upswing from 5773 during December, depending on what happens to the US$ dollar (see commentary/forecasts above).

The daily composite cycle has for the last several months, indicated Copper ending this year’s corrective downswing into late-December but this now seems too ambitious – from an Elliott Wave perspective, it will take longer to complete this correction – see fig #4. In most cases, if the cycle-projection is earlier than the actual price action, then it often resolves with a rather accelerative sell-off in the Copper price in an attempt to ‘catch-up’. This means the longer Copper holds up above the August low as minor wave b., the quicker it will decline afterwards as wave c. within this year’s corrective zig zag pattern.

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fig. #3 CRB Cash Index - Daily

fig. #4 Copper - Daily - Composite Cycle - CycleTechPro 2.0.0 – © 2018

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Looking ahead, the cycle-projection turns higher into its next peak due in April ’19 which is a period in which we expect Copper to resume its ‘Inflation-Pop’ uptrend as intermediate wave (3).

cOPPEr is engaged in a massive uptrend that resumed from the grand ‘Re-Synchronisation’ lows of Feb.’16, as primary wave Ⓒ, subdividing (1)-(2)-(3)-(4)-(5) with ultimate upside targets into year-2021/2022 to new record highs. Wave (1) ended last June at 7348 and the following decline is wave (2) shown unfolding into a simple zig zag pattern, a-b-c – see fig #5.

Minor wave a. completed an initial decline into the July low of 5988 where wave b. rallies have since begun a corrective upswing.

Now wave b. can either unfold into an expanding flat pattern or a triangle pattern – see fig #6. As an expanding flat, wave b. can stretch up towards 6630+/- before heading lower as wave c. to 5290+/-.

But as a triangle, the upside limit has already traded to 6393 in early-October and basis the triangle, it would now open the way for a more immediate, accelerative decline to 5290+/-. Either way, this means Copper has upside limitations but with a lot of downside risk.

For more charts, time-periods, alternate counts, please log-in to the EW-Forecast database.

ALUMINIUM

Last month’s ALUMINIUM outlook maintained a rather bearish bias which prolongs this year’s corrective downswing as intermediate wave (2) – see fig #7. Oct.’s break below the July low of 2001 triggered the final phase of overall declines which are expected to continue lower through December.

Wave (2) has declined as a corrective, balancing sequence of wave (1)’s uptrend that began from the November ’15 low of 1433. This is taking the form of a double zig zag pattern, labelled in minor degree, a-b-c-x-a-b-c with the first zig zag ending last April at 2175 but the secondary zig zag still in downside progress.

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fig. #5 Copper - Daily


fig. #7 Aluminium - Daily

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Minor wave a. of the secondary zig zag ended into the July low of 2001 – extending this by a fib. 61.8% ratio projects wave c. towards an ultimate downside target at 1800+/-.

The target to 1800+/- fits the overall corrective sell-off extending to most Base Metals through December and across New Year into Q1-2019. But ALUMINIUM has had a habit of diverging from the price-development of other base metals in the past, and it has already fulfilled most of its wave (2) correction which means the existing low of 1925 traded mid-November could have already ended the entirety of the correction. It’s difficult to prove or disprove right now but depending on the time horizon of a portfolio, could be bought right now because the medium-term ‘Inflation-Pop’ outlook remains very bullish into the next decade.

LEAD

LEAD has traded within October’s trading-range of 1876 and 2116 during the last month which might seem un-directional but is actually building a base of support prior to another push higher though December.

October’s initial push higher from 1876 to 2116 ended the 1st wave advance within a developing five wave impulse pattern targeting levels towards 2268-75+/-. This may take another couple of months before reaching those upside numbers but this is labelled as the third and final sequence of an expanding flat pattern which is labelled minor wave x. – see fig #8.

The expanding flat began from the earlier mid-August low of 1918 which itself completed a zig zag downswing from this year’s February high of 2685. The probability of another zig zag downswing repeating the February/August sell-off once minor wave x. has ended towards 2268-75+/- is rated high because of the three wave downswing that unfolded as the second of three sequences within minor wave x., i.e. the decline from August’s reaction high of 2131 into the October low of 1876. This three wave zig zag could not end the entirety of this year’s decline as a five wave subdivision would be necessary – and even if it did, it would transform what is currently a three wave sequence from 2685 to 1918 into a five wave pattern to 1876 – that in itself would confirm downside continuity into Q1 2019. So whichever way this is structured, it tells us to expect more declines once shorter-term upside rallies have completed.

Looking further ahead, February’s decline from 2685 is labelled as intermediate wave (2) within the developing five wave ‘Inflation-Pop’ uptrend that began from the Nov.’15 lows. Wave (1) ended into the Feb.’18 high of 2685 and wave (2) is still unfolding into a double zig zag pattern, a-b-c-x-a-b-c – see fig #9.

In recent months, the first zig zag downswing to 1918 is extended by a fib. 38.2% ratio which projects a terminal low for the secondary zig zag towards 1686+/-. This remains our preferential downside target. Interim downside targets for minor wave a. are measured towards 1890+/-.

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« »fig. #8 Lead - 540 mins.

fig. #9 Lead - Daily

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The medium-term outlook remains very bullish with upside targets for wave (5) of primary wave Ⓒ towards 5585+/-.


ZINc

The August advance from 2283 was identified last month as unfolding higher into a counter-trend correction, labelled minor wave b. with upside targets towards 2920-55+/-. This was balancing the preceding five wave impulse downswing that began from last February’s high of 3595. The rally was originally forecast taking the form of a single zig zag pattern with upside targets towards 2750+/- (see October’s report) but modified last month (November) to show more upside potential, developing into a double zig zag pattern with higher targets towards 2920-55+/-. See fig #10. The reason for this change to higher levels was simple – other positively-correlated base metals were behind schedule in responding higher within corrective pattern sequences.

Since then, ZINc has pulled lower though October/November to 2437 as wave x but has remained above the August low, a critical development that confirms the additional push higher as a double zig zag pattern, a-b-c-x-a-b-c.

The 2437 low could be exceeded slightly, extending wave x declines a little further but it shouldn’t break below 2283 and ideally, should hold above 2437 as we suspect it will, then turn higher to begin a secondary a-b-c zig zag targeting the 2920-55+/- areas.

Inserting this upside rally within this year’s picture confirms a developing zig zag pattern as intermediate wave (2). Labelled in minor degree, a-b-c, wave a. can be clearly seen unfolding from the February ’18 high of 3595 into a five wave impulse pattern, ending in August at 2283. This ensures to things – first, a corrective rally as minor wave b. to 2920-55+/- but upon completion, a hefty downswing as minor wave c.

And so, looking ahead, wave (2) is extending the time-line for a continued decline over the coming months, into Q1-2019 – see fig #11. With minor wave a. of this zig zag completed at 2283, extending this by a fib. 38.2% ratio would eventually signal a downside objective for minor wave c. towards 1925+/-. That will be another harsh decline if it begins from 2920+/-.

Looking even further ahead, the ‘Inflation-Pop’ uptrend that began primary wave Ⓒ from the Jan.’16 low of 1445 remains very much on course with very little deviation in these Elliott Wave forecasts over the last several years. Wave (3) is expected to begin sometime into H1-2019 with upside targets into 2020 towards 4600+/-.

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« »fig. #10 Zinc - 540 mins.

fig. #11 Zinc - Daily

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PrEcIOUs METALs GOLD | sILvEr | GDX | XAU

GOLD’s daily composite cycle has provided some excellent timing signals for directional change over the last few years – see fig #12. The red cycle-line projection is meant to illustrate the ‘timing’ and ‘direction’ of the trend, NOT the amplitude of the price action and often, a ‘cycle-extreme’ may not necessarily indicate an equivalent ‘price-extreme’ (vice-versa) in the same manner as a technical RSI (relative Strength Index) study would show.

This is the case in gold’s latest cycle analysis – a cycle projection for another low in Dec.’18 is actually higher than the signal delivered last August.

But Elliott Wave analysis indicates a lower price low into this time period, or perhaps later into January/February if the timing is being delayed by any temporary weakness in the US$ dollar.

But looking ahead into 2019, the cycle projection clearly points higher which is interpreted as beginning primary wave ③’s advance to upside targets beyond the July ‘16 highs of 1375.27.

The shorter-term gold outlook is finely balanced between two scenarios – both forecast a downside attempt back towards the Dec.’16 low of 1122.98 before ending primary wave ②’s correction and beginning wave ③’s surge higher (or cycle wave C’s advance to 1527.00+/-) but from which high does gold begin this final downswing for 2018?

scENArIO #1 – January’s five wave impulse decline from 1366.38 is labelled as intermediate wave (C) subdividing i-ii-iii-iv-v which is consistent for both counts/scenarios. Minor wave iii. three ended last August at 1160.24 but in this count, minor wave iv. four has already completed into the late-October high of 1243.55. Minor wave v. five is engaged to the downside, targeting 1122.98+/-. See fig #13. Success depends on the US$ dollar – should the index break above the November high of 97.69, then it would certainly play into a more immediate decline for gold.

scENArIO #2 – Minor wave iv. four extends higher from Aug.’s low as a double zig zag pattern with upside targets to 1282.00+/-. See fig #14.

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fig. #12 Gold - Composite Cycle - Daily - CycleTechPro 2.0.0 – © 2018

fig. #13 Gold - Daily

fig. #14 Gold - Daily - Count #2

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This would only be possible if the US$ dollar index staged its expected -3.8% decline to 92.63+/- over the next month or so, before turning higher afterwards. The defining levels are above 1237.66 (bullish) and below 1196.15 (bearish) – see inset.


MINING sTOcks GDX

The gold mining stocks are expected to outperform bullion during the coming year/s of 2019-22 but before this can begin a new uptrend, the corrective downswing that began the GDX’s decline from the August ’16 high of 31.79 must be satisfactorily completed.

Last month’s report showed two short-term scenarios – the first where primary wave ②’s correction had completed last September at 17.28 and the second which prolonged the decline towards 16.36+/-. The caveat for the bullish count was a break above horizontal resistance at 20.83, the low traded last February. But the GDX index failed to do this, forming a high late-October at 20.51 then declining since to 18.26 which heightens the probability of an eventual downside attempt to 16.36+/-. See fig #15. For more charts, time-periods, alternate counts, please log-in to the EW-Forecast database.

GOLD MINErs ABX | rANDGOLD & NEM

A broader coverage of individual gold mining stocks will be published in the annual 2019 EW-Navigator Report due in late-January 2019. Until then, we’re updating two equities, BArrIck GOLD (ABX) and Randgold Resources (RRS) since they are merging and represent a token view of sentiment.

Unlike the broader GDX Gold Miners index, Barrick Gold has already confirmed its 2-year corrective downswing from the July ’16 high of 23.47 ended at 9.53 last September – see fig #16. This can be verified where the zig zag pattern, composed of three main price-swings, A-B-C has symmetrically unfolded where wave A extended by a fib. 61.8% ratio projects into the 9.90+/- level, just 40 cents from the actual low of wave C.

The following advance has yet to complete a new five wave impulse pattern that begins a new sustainable uptrend but is expected to do so into year-end as primary wave ①. Wave ② follows as a corrective downswing into New Year, about the same time as the lower-low forecast across most other mining stocks.

rANDGOLD rEsOUrcEs has also ended a 2-year correction which began from its July ’16 high of 9820.00 into last September’s low of 4607.00 as a zig zag pattern, (A)-(B)-(C).

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fig. #16 Amer Barrick - Daily

fig. #15 GDX - Gold Miners Index - Daily

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This equity has a different long-term pattern development to most other mining stocks so the 4607.00 low is labelled ending primary wave ④ within a long-term five-wave uptrend – see fig #17.

The advance from September’s low is attempting to unfold into a five wave impulse pattern, labelled intermediate wave (1) of primary ⑤ – upside targets are into the 7000.00+/- area, at which point, a corrective decline can begin wave (2) into the first couple of months of 2019. There’s huge upside potential for the next several years.

NEWMONT MINING (NEM) which is one of several archetype patterns in play and with the most historical data to work from is similarly positioned alongside the GDX index – see fig #18.

Its 2½-year correction from the Aug.’16 high of 46.07 which ended primary wave ① remains incomplete but with only one additional but final decline for wave ② with downside targets towards 27.35+/-. The short-term upswing from September’s low of 29.16 is almost complete as minor wave iv. four within intermediate wave (C)’s five wave impulse downswing.

sILvEr BULLION

The medium-term forecast for sILvEr was dis-cussed at length in last month’s EW-Commodities Outlook report – this month, we intend to con-centrate on the shorter-term price development.

sILvEr’s overall decline from the Aug.’16 peak of 20.78 (orthodox high) is labelled unfolding into a triple zig zag, (A)-(B)-(C)-(X)-(A)-(B)-(C)-(X)-(A)-(B)-(C), an overlapping eleven price-swing sequence as primary wave Ⓑ – see fig #19. Of particular interest is the way the secondary (X) wave unfolded, into a triangle pattern – placed within the context of the triple zig zag, this above all else confirms the downside limitation for price declines.

The triangle ended last June at 17.32, beginning the third and final zig zag sequence, (A)-(B)-(C). Wave (A) ended at 14.00 last September where wave (B) has either ended already into the early-November high of 14.92 or extending towards the fib. 50% retracement area of 15.57+/-.

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fig. #17 Randgold Resources - Daily

fig. #18 Newmont Mining - Daily

fig. #19 Silver - Daily

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The difference between identifying the completion of wave (B) largely depends on the US$ dollar’s direction and amplitude over the next month (see above US$ dollar index commentary).

But what both short-term scenarios do share is an eventual downside test towards targets of 13.13+/-. This is the completion of wave (C) of this third and final zig zag and the end of the second sequence of a multi-year expanding flat pattern as primary wave Ⓑ.

The expanding flat was updated last month and is shown again here - see fig #20. A downside attempt to 13.13+/- is followed by primary wave Ⓒ’s advance towards minimum 22.53+/-, max. 25.00+/-. That’s a +90% per cent gain over the next 18-24 month period.

But the larger message is that the super-cycle ended back in 2011 – the upside attempt to 22.53-25.00+/- is simply a correction within a long-term downswing.

The same outlook is fast becoming a reality for gold bullion – see alternate bearish counts in the EW-Forecast database.


MINING sTOcks XAU

The XAU GOLD/sILvEr INDEX of mining stocks is similarly positioned as the GDX. Primary wave ① of a new decennial uptrend ended in August ’16 at 114.71 but wave ② remains in downside progress but closing-in on completion towards 58.05+/-. See fig #21. The decline has unfolded into a double zig zag pattern where wave (C) of the secondary sequence begun from the April ’18 high of 86.10.

This is subdividing into a smaller five wave impulse pattern, i-ii-iii-iv-v where September’s upswing is taking the form of a triangle for minor wave iv. four.

There is still some range-trading to be done into year-end, but upon completion, giving way to a final decline as minor wave v. five towards 58.05+/-. For more charts, time-periods, alternate counts, please log-in to the EW-Forecast database.

PLATINUM

PLATINUM’s medium-term decline from its all-time-high of 2304.00 began from the March ’08 peak. This is the first phase of a long-term correction that is expected to last for another two decades, into the 2030’s.

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fig. #20 Silver - Weekly

fig. #21 XAU Gold/Silver Index - Daily

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In some respect, this multi-decennial decline is similar to Crude Oil, taking the form of an expanding flat pattern labelled 🄰‑🄱‑🄲 in super-cycle degree. This is the balancing phase of the long-term super-cycle uptrend that began from the 1930’s low.

Super-cycle wave 🄰’s decline is unfolding into a zig zag, labelled A-B-C in cycle degree where wave A ended its decline during the financial-crisis sell-off to 732.50, wave B into the Aug.’11 high of 1921.00 but wave C still in decline targeting levels towards 610.73+/-. This price-projection is derived by measuring waves A and C equally, by a fib. 100% equality ratio.

Wave C subdivides into a five wave impulse pattern, ①-②-③-④-⑤ and we pick-up the final phase of declines for primary wave ⑤ – see fig #22. This is subdividing into intermediate degree, (1)-(2)-(3)-(4)-(5) where wave (3) ended into the Aug.’18 low of 757.50, at the same time as gold ended its corresponding decline at 1160.24. Wave (4) has since traded up to 878.25 last month but looks completed at this level with wave (5) now in decline towards 610.73+/-.

In order to test the fib. 100% equality ratio target of cycle waves A & C at 610.73+/-, it would require wave (5) to undergo ‘extension’, where it measures larger than its counterparts, (1) or (3). That in itself is an uncommon recurrence, so what other possibilities are there?

The minimum downside target to complete cycle wave C is for it to break marginally below cycle wave A’s low of 732.50, so this is a minimum requirement for intermediate wave (5). Wave (3) measures slightly longer/larger than wave (1) so there is no limit for wave (5)’s decline, but its minimum requirement to break below 732.50 stands. But should wave (5) unfold by a fib. 100% equality ratio with wave (1), then higher targets to 654.45+/- are possible, fulfilling all necessary price and pattern requirements.

PALLADIUM

Last month’s PALLADIUM update forecast further gains from current levels of 1086.00 targeting upside levels towards 1248.75+/- for the completion of minor wave v. five of intermediate wave (3) – see fig #23. Since then, Palladium has traded up to 1188.83, a gain of +9.4% per cent in just 1-month.

The Aug. advance is subdividing into a 5 wave impulse pattern for minor wave v., 1-2-3-4-5 where minor wave 3 ended at the Oct. high of 1155.80. Wave 4 has since begun to develop into an expanding flat pattern, [a]-[b]-[c] where wave [a] ended a dip to 1066.75, wave [b] to a slightly higher-high at 1188.80 but with wave [c] now in decline targeting levels towards 1035.00+/-. Once minute wave 4 has completed, wave 5 then begins a final advance for minor wave v. of (3) towards 1248.75+/-.

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fig. #23 Palladium - Daily

fig. #22 Platinum - Daily

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ENErGY XLE | crUDE OIL & cYcLEs | BrENT OIL

Downside targets for the XLE ENErGY (ETf) index towards 67.30+/- were summarily broken during the late-October decline which requires some changes for the short-term wave count.

Instead of resuming its uptrend more immediately, the overall corrective decline unfolding from the Dec.’16 high of 78.45 is relabeled as unfolding into an expanding flat pattern, (A)-(B)-(C) – see fig #24. With waves (A) and (B) completed already, wave (C) began a five wave impulse decline from the May ’18 high of 79.41, i-ii-iii-iv-v, in minor degree.

Minor wave iii. three ended its decline in late-October, wave iv. four has since range-traded into a developing triangle pattern. If so, then prices should pull higher into year-end and perhaps into early New Year prior to completion and before a final decline as minor wave v. five towards downside targets of 59.70+/-. This is derived by extending wave (A) by a fib. 14.58% ratio. Watch for completion into end-Q1-2019. The medium-term outlook for the next few years remains very bullish with upside targets towards 128.62-130.51+/-. Which leads us to confirm the following wave counts for Crude/Brent oil.


crUDE OIL & BrENT OIL

Last month’s downside targets in crUDE/BrENT OIL from 69.28 to 62.15+/- and from 79.78 to 68.10+/- were considered ambitious at the time, but even these have now been exceeded. The declines were so rapid that it now confirms the zig zag patterns in advance from the Feb.’16 lows have already completed, into the October highs. This explains why downside targets have been exceeded.

The monthly composite cycle shown at various time this year was forewarning of a tipping point for these oil contracts – see fig #25. The cycle is not an exact science, but it does indicate the timing of turning points within a couple of month’s deviation to the red cycle-line projection. The topping activity into the second-half of this year did provide some warning, but now we know for certain – the next major cycle-trough is in Sep.’19.

Back in early-2016, the lows for Crude/Brent oil were identified as beginning the 2nd phase of the ‘INFLATION-POP’. This was the final phase of advances in commodity prices and termed as the grand ‘Re-Synchronisation’ lows of Emerging Markets too. But unlike other key commodities like Copper for example, Crude/Bent oil’s advances were expected to develop from these lows as double zig zag patterns, Ⓐ‑Ⓑ‑Ⓒ-Ⓧ-Ⓐ‑Ⓑ‑Ⓒ (primary or cycle degree).

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fig. #25 Crude Oil - Monthly - Composite Cycle - CycleTechPro 2.0.0 – © 2018

fig. #24 XLE Energy SPDR - Daily

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For the last few years, interim upside targets to complete the first zig zags were towards 78.90+/- for crUDE OIL, derived by extending wave A by a fib. 61.8% ratio. October’s high didn’t quite make that, it fell $2 dollars short at 76.90 but the depth of October’s decline has now confirmed it did complete into those highs – see fig #26. The nomenclature of the zig zag changes to +1 degree higher, A-B-C in cycle degree otherwise there is no change to the upswing from 26.05 ending at 76.90.

The zig zag is expected to eventually develop into a double with record highs into the next decade – this fits into the overall development of the ‘Inflation-Pop’ cycle.

That means the decline from 76.90 is cycle wave X, a developing primary degree zig zag, Ⓐ‑Ⓑ‑Ⓒ subdividing 5-3-5. Primary wave Ⓐ is completing now towards the fib. 38.2% retracement level of 50.53+/- with wave Ⓑ in its early stages of lifting higher targeting the fib. 38.2% ret. area at 59.25+/- but it could do more. Extending wave Ⓐ by a fib. 61.8% ratio projects an eventual low for wave Ⓒ towards the fib. 61.8% ret. area at 39.40+/-.

It will take several more months for complete wave X at 39.40+/- but when it does, the secondary zig zag advance can then get underway to new record highs – see fig #27.

There is an alternate count #2 scenario although this seems highly unlikely because Emerging Markets and other Commodities haven’t yet fulfilled their corresponding ‘Inflation-Pop’ upside targets to record highs – see fig #28.

But for the record, this depicts a more bearish decline unfolding from October’s high as the secondary cycle degree zig zag pattern with downside targets to 13.00+/-.

What this does is change the preferential count #1 pattern from its expanding flat (hence, super-cycle wave 🄱 to record highs) to this double zig zag. Otherwise, the long-term downside targets of 13.00+/- remains the same for both.

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fig. #28 Crude Oil - Monthly - Count #2

fig. #27 Crude Oil - Weekly

fig. #26 Crude Oil - Daily

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BrENT OIL is engaged in the exact same pattern development as Crude oil. The February ’16 advance from 27.10 ended a cycle degree zig zag pattern at 86.74, above the original minimum upside target of 79.88+/- at 86.74 – see fig #29. Cycle wave X is now in downside progress, unfolding into a primary degree zig zag, Ⓐ‑Ⓑ‑Ⓒ. It has, by comparison to Crude oil, outperformed slightly because the current decline as primary wave Ⓐ has not been able to reach the fib. 38.2% retracement area of the preceding zig zag which is at 56.00+/-.

This may result in lifting ultimate downside targets for primary wave Ⓒ from the current downside target of 42.30+/- sometime later. But in the meantime, there is limited short-term downside risk as primary wave Ⓑ is preparing to lift higher into a correction, targeting levels towards 67.25+/-.

End | Fin | EndE

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fig. #29 Brent Oil - Daily

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fig. #1 US-Dollar Index - Daily

fig. #2 US-Dollar Index - Daily - Composite Cycle - CycleTechPro 2.0.0 – © 2018

APPENDIX

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fig. #3 CRB Cash Index - Daily

fig. #4 Copper - Daily - Composite Cycle - CycleTechPro 2.0.0 – © 2018

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fig. #7 Aluminium - Daily

fig. #8 Lead - 540 mins.

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fig. #9 Lead - Daily

fig. #10 Zinc - 540 mins.

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fig. #11 Zinc - Daily

fig. #12 Gold - Daily - Composite Cycle - CycleTechPro 2.0.0 – © 2018

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fig. #13 Gold - Daily

fig. #14 Gold - Daily - Count #2

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fig. #15 GDX Gold Miners Index - Daily

fig. #16 Amer Barrick - Daily

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fig. #17 Randgold - Daily

fig. #18 Newmont Mining - Daily

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fig. #21 XAU Gold/Silver Index - Daily

fig. #22 Platinum - Daily

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fig. #23 Palladium - Daily

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fig. #24 XLE Energy SPDR - Daily

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fig. #25 Crude Oil - Monthly - Composite Cycle - CycleTechPro 2.0.0 – © 2018

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fig. #26 Crude Oil - Daily

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fig. #27 Crude Oil - Weekly

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fig. #28 Crude Oil - Monthly - Count #2

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fig. #29 Brent Oil - Daily

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COMMODITY OUTLOOK Base Metals | Precious Metals | Energy - … · 2019-04-02 · 3 WaveTrack International GmbH Kanalstr. 14 80538 Munich Germany Phone: +49-89-21020711 Fax: +49-89-92185245