In my most recent few forecasts for subscribers and public articles
I’ve discussed a major correction in Gold, and it dropped $208 within 3
days of that forecast several weeks ago as Gold traders will recall.
Last week I wrote about further consolidation being required in what I’m
seeing as a either 4th wave likely “Triangle Pattern” that will
consolidate the 34 month run from $681 to $1910 into August of this
year, or a 3 wave “A B C” pattern. We are right now in some form of C
wave, it’s just a matter now of confirming if we are going to get a “D
and E” wave to follow, or the C wave drops lower before we bottom.
A Triangle pattern serves to let the “economics of the security”
catch up with the prior large movement upwards in price. In essence,
the crowd behavior pushed the price of Gold a bit too high too fast, and
this consolidation pattern lets the fundamentals catch up to price
action. We had a parabolic move I discussed many weeks ago, and those
always end badly to the downside. The $208 drop in three days is a
typical reaction to a spike run like that. At the end of the day
though, I had been forecasting what I call a “Wave 3” top and was
looking for a multi week or multi month consolidation pattern before
Gold could move higher.
Let’s examine what that triangle projection may look like. They take
the form of 5 waves, or what we can call ABCDE in a pattern. The
biggest drop is always the “A” wave, and that was 1910 to 1702 in 3 days
or less. The next biggest drop is the “C” Wave, and that was 1920 to
1793, noting it was a Fibonacci 61.8% drop relative to the A wave. In
other words, each successive wave down in the 5 wave triangle is
smaller. This is due to the sentiment finally shifting and the trading
patterns moving from people chasing the hot sector or stock or metal, to
the long term investors accumulating the dips.
If we end up consolidating in a “Triangle”, then Gold should end up
looking something like the below pattern I drew, with a target of $2,350
per ounce many months out:
The other pattern we are watching for at TMTF is the ABC Correction
pattern. We had the A wave down to 1702, which corrected 50% of the
move from 1480-1910 in 3 days. Rarely do you get a major move down like
that and not get some type of “re-test” of that low, but because the
fundamentals for Gold are strong and getting stronger, we are favoring
the Triangle pattern still as most likely. With that said, there is a
fat and juicy “Gap” sitting in the chart around 1660 on Gold and
dropping down there is what a lot of traders are watching. If that were
to fulfill, then we will see an ABC correction ending around $1643, and
then Gold will begin another multi month rally to new highs:
Gold continues to correct as forecast in a 4th wave pattern
I got a bit of hate e-mail over the last few weeks from the Gold Bugs
who thought I didn’t know what I was talking about when I forecasted a
multi-month consolidation and correction in Gold was imminent. I’ve
written ad nauseum about crowd behavioral patterns as they related to
both stock markets and precious metals. It should not come as a
surprise that Gold is continuing to drop after a 34 Fibonacci month
rally from $681 to $1910 per ounce. That rally came in five clear
Elliott Waves and ended with a parabolic race to the top. I
consistently warned my subscribers and readers of my articles about not
being caught holding the bag and to take defensive measures.
My most recent update was to simply try to figure out whether the
continuing correction in Gold would take the form of an ABC pattern or
an ABCDE Triangle Pattern. It is becoming more clear that the official
pattern is ABC. In English it means that the first leg down from 1910
to 1702 was the “A” Wave, the rally back up to 1920 was the “B” wave.
The C wave is continuing underway and one of my longstanding targets is
$1643, which is a Fibonacci fractal relationship to the prior lows and
highs, and also conveniently fills in a “Gap” in the Gold chart in the
1650’s.
During these 4th wave consolidation periods, it reduces sentiment
back down to normal levels and lets the economics of the move in Gold
catch up with the price action that was extended. The first area to
watch is the re-test of $1702 spot pricing for a C wave low, but the
evidence is for a further drop to $1643 before I would get too
interested in trying to game Gold to the upside.
Here is the chart I sent out 9 days ago with Gold at $1837 forecasting a possible C wave continuing lower:
thanks for the info
ReplyDeletehttp://wcftc-corps.com