It is a little like flogging a dead horse but nevertheless we continue to look at ABX frequently in the hope that it may give a clue as to whether or not we are already in the anticipated bull leg for gold.

Looking at the medium term chart, on the left, it would be entirely possible that a wedge had been completed at the Oct. lows. The problem with that is that the 5th wave is disproportionately small, both in time and size. And the 5th wave does not reach or exceed the trend line which, in this kind of wedge, is relatively unusual. The question then becomes what is this. Since wave 2 is a zig-zag we would expect 4 to be a  sideways move, typically a triangle or a flat, or an irregular triangle or flat. The flat should not go beyond $15. In this case the flat is skewed to the downside and is already at an ideal point. If the structure morphs into a triangle from here we should get waves d and e still, in some cases it can get even longer.

Having said all that it still remains a fact that the target is not that far from $10 but could be deeper. On the bounce the stock could easily reach about $23. So on a risk/reward basis you might want to continue to hold if you bought with an $11 handle. This is not the case with short options as time decay can be considerable.

Below is the Big picture once again as a refresher;