Last time we discussed Gold (Dec 11, 2008), I posted a 60-minute chart of GLD. On that chart I had a simple EW target of 86 based on wave A equal wave C
Well, that so far has been a darn good target. Look where GLD turned for a pullback. I have added another target based on C = 1.62 * A
Now we have a very interesting situation. Both Gold and GLD are, finally, in a confirmed uptrend. The rise from Dec 7 looks impulsive. I cannot say whether it is a wave C, a wave A, or a Wave 1 of some degree. It already has pulled back 38% and sitting at a somewhat important support/resistance level around 82.Let’s step back and look at the daily chart
Some indicators are turning over. That does not mean that GLD cannot go higher. But maybe the pullback is not over yet. There is a very well defined support/resistance area, and I, personally, would take profit, or lighten a position if that area would not hold. Why so cautious? Well, look at the green trend line that is connecting all the lower highs, Gold need to make a higher high at some point, and then I may be able to relax a little.Things have been improving really. Stepping back and looking at the weekly chart, we see this
I had posted this before, and had worried about 89 week MA flattening with price beneath it, and had said price had to rise to improve that ominous view, and price has just done that. The weekly picture looks a lot better than a few weeks ago. I just want to be a cautious with shorter time frames. The reason for all this cautiousness is that I am not yet convinced that the Gold Bull is back.
On the same post of Dec 11, 2008, I pointed to what looked like an Island Reversal pattern. Now we know that pattern was valid as GLD has advanced nicely. Technical Analysis works sometimes!
Some big boys of Wall Street and Bay Street, and I am sure some other streets, deride technical analysis through their writings or TV interviews. My question is, if their methods work so well, how come people are redeeming whatever meagre amount that is left from their mutual fund holdings?
I have discussed how all analysis is susceptible to failure. I humbly recommend that newer readers read that post of Sept 26, 2008.
With technical analysis I see the failure soon enough to run for safety. With other brands of analysis, I shall wait for some corporate exec to put the numbers together, and then I have to trust that the books are not cooked (I am sure they never cook them), and then I have to pray the numbers have not been leaked to some better connected than me (I am sure they never leak numbers) and then, after the close of the market, I either get killed or rewarded – one heck of way to go about trading a bear market.
And that is just ordinary companies. Analyzing something like gold needs an understanding of so many different financial and monetary parameters.
I am a simple man. I’d rather take a chance on my island reversal.
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2 comments:
I thought that as well even looking at the gold miners. This seems to be an impulsive wave, which puts into question if this is actually a part of a primary B from the OCT 27 low. The uptrend seems strong now, so it really makes me open to other scenarios now, since a double three could be negated. I see a double three on the gold miners and a possible ascending triangle. I am still going to keep primary B of Cycle 2 open. IMHO, this uptrend seems particularly strong that any pullback will be brief. The weekly indicators are recovering, suggesting that strength. I just cannot envision right now how that would play into the wave counts, especially if it is a brief period of consolidation. If so, that would mean a pretty strong B wave. I will have to start considering bullish scenarios.
JK
JK, sorry I missed your comment, hence the late reply.
Yes, everything looks very strong, and gathering more steam
we are at very strong rresistance level as well. I have both bullish and bearish open, it is the first kick-off from mid Nov lows that looks more like an abc to me than a 1-2-3
We are a confirmed uptrend, true that weeklies are on buy, but they should be in an intermediate uptrend.
It has so far retraced 50%, let's see what happens at resistance when volume returns, especially with miners
Gold has held like true money.
I think we should keep both bullish and bearish scenariosopen and play it using up/down trends
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