Gold seems have completed a 5 wave down.
It can be a micro 4, it can be major A (or some other degree A). What that tells me is that it can make a new high or a new low. GREAT! Why not toss a coin?
Well, I can certainly toss a coin, but I can also monitor the makeup of the waves as they evolve, as well as other technical indicators.
It is getting overbought on the daily chart but that does not tell anyone anything.
One thing to Watch is the gold diggers, as long as they lead, the metal has a good chance of acting well.
At a higher level, it is a question of whether market participants expect the central bank infusion to juice up the system to the point of feeling inflationary pressures in near future or not.
On this 60-min chart, despite having the alternate count, I think we are having a 5 wave up, with the 5th wave yet to come.
The way I use waves is as a guide line, and then I check their viability via other technical means. I should remember that there are a few factors that determine the price of the yellow metal
- Future inflation expectations
- Political instability
- Financial instability
- The direction of US Dollar
So, the horrible, senseless events in Mumbai, and any escalated rhetoric between India and Pakistan may play a role. Also, the rally in US Dollar looks a bit tired and in need of a breath
So far so good for gold.
I, however, should not get complacent. There is potential for the yellow metal to go some good distance, all it has to do now, is impulse up, and correct shallow – higher highs and higher lows, regardless of what the story of the day is.
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2 comments:
Thank you for your insight.
I have been incorporating EWT as a third leg of my technical analysis; I am trying to get the labelling down still. I also plotted 3+ scenarios counting the gold sector, and some are in concurrence with yours. For instance, I also considered that the gold sector (xgd on tsx) might have finished a 5 wave down but at the end of october, which also concluded an A wave correction from the march peak. This means that the current upleg could be the beginning of a B wave advance. At the same time, I can see an entire ABC correction occurring from March until the end of October with the C wave exhibiting a potential 5 wave decline, which means the correction may have finished. I am wary of this however because that means the bear in the gold sector was only 8 months, and that we are resuming the secular bull (dating back from 2002) in gold equities with the beginning of what might be a major 3 advance.
I have one question. The labelling on your chart of the March peak in Gold signify that we are still in the 5 wave up of a Major 1 in a secular bull for gold? If so, would there be a major correction pending in mid 2009?
Thank you for your posts. They have been helpful in trying to understand some direction in this market.
J.K.
Hi J.K.
good questions, I think I have had longer term counts of Gold and my favorite gold miners (AEM, GG) posted at times. But, how about I do a full post on gold and gold miners weekly charts and counts and address your questions like that?
Just be kind and remind me on Friday or Saturday (you can email, or leave a comment), and I will do a detailed weekend post.
quickly, though, I think gold is either in micro 4 of minute 3 of minor 3 of intermediate 3 of major 5 (bullish) or in primary a of cycle 2 (bearish) the bullish count is hanging by a thread and has already come close to negation once. Regardless, both situations are short-term corrective
As with gold miners, I believe both AEM and GG have had a cycle 1 top (July 2007) and are correcting along primary A of cycle 2, which may have already bottomed via a
hope this helped. Do remind me and I will try to do a detailed weekend post on the subject
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