A few readers have asked me to take a look at Gold prices and I will do so, starting with a possible Elliott Count on the Weekly chart and then dropping down to see resistance and an interesting structure on the Daily Chart.
Gold Prices ($GOLD) Weekly:
Ok, let’s take this slowly. I’m not saying this is the exact Elliott Wave Count, but to me it is a plausible one and I encourage other readers to comment your thoughts.
If this count is correct, it assumes that the whole structure from 2008 onwards is a massive, complex corrective phase, perhaps winding into a double Zig-Zag of sorts – or Double Flat. The “X” Wave is a separator between ABC Corrective phases.
Gold peaked just above $1,000 an ounce in March, 2008 before heading down into a nasty, confusing pattern. We may have had a three wave ABC into September’s lows (each wave subdivided into 3 waves) and then a connector wave (X) that then resolved into a second ABC pattern.
If this is the case, then we’re missing the final C wave down to complete the pattern, and it seems – until proven otherwise by a break above $950 – that the market wants to finish the pattern, but this is clearly not the only interpretation out there.
As I write this, Gold is up around $930 per ounce, so the entire bearish projection is invalidated with a close above $950 (which also gives you a great risk-reward).
If you’re thinking bearishly, keep in mind that we’ve officially broken and closed above a downward sloping trendline that connects the three prior price highs from early 2008.
Let’s drop down to the Daily Chart.
Gold Prices ($GOLD) Daily:
Taking the larger structure into view, we see a possible ascending triangle (which perhaps has bullish implications) however, we also see some elements that give the bulls pause.
We may be completing a “Three Push” pattern (which is a bearish reversal pattern) into key resistance, as confirmed by the negative momentum divergence that’s set-in.
Also, one can draw an Elliott 5-wave impluse up, but I caution against that because each 1, 3, and 5 wave seem to be about the same length (in price) and also proposed wave 4 would enter the price territory of Wave 1 so we most likely have to rule the move from November to February as another complex Corrective Wave (meaning going against the prevailing larger correction or downtrend).
However you interpret it, Gold is at an extremely critical level right here. Just a little strength to the upside and we will have momentum to make a run back to $1,000 per ounce if we break out of these levels here… but on the same ticket, we could fail miserably at the current price levels and head back down to test the $700 level which would likely end the corrective phase and launch us back to new highs after that swing completed.
Dig deeper and do your own analysis here – the resolution will be interesting.
For a different take, watch Adam Hewison’s recent video “Fibonacci Analysis in the Gold Market“.
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