Updating Gold’s Expanding Daily Arc

Nov 5, 2009: 10:32 PM CST

I wanted to update you on the continuing arc in gold from the prior post “Two Views of the Angles of Ascent in Gold” which was showing a steeply rising parabolic formation.

Here is the current “pure price arc” in gold’s daily chart:

From the last update, gold has bounced strongly off the arc updated from prior post.  Its angle of ascent is still climbing higher, which can be measured by drawing trendlines under each new swing low and noting the angle that each trendline – connecting two swing lows – creates.

See the prior “Angle of Ascent” update contained the recent rising angle measures for these trendlines.

In general, commodities can have a higher tendency to form these ‘parabolic moves’ than stocks because parabolic moves in commodities are generally driven by scarcity or fear (think of the 2008 run-up in crude oil – and the “end of oil” thesis that circulated) , while parabolic moves in stocks are generally driven by greed (“I have to buy now at any price!”).

Still, the analysis, and expected benefit from watching this trendline comes from two factors:

1.  Watch for price to bounce/rally off tests of the lower ascending arc, as occurred recently

2.  Watch for a breakdown of price through the arc to hint that a deeper than normal retracement might be ahead

Ascending or parabolic moves cannot continue forever, and – to an extent – the larger the rise… the harder the fall.

Keep this on your trading and analysis radar!

For current Elliott Wave counts on gold from Robert Prechter’s Elliott Wave International, sign up for their free-week (access their analysis and forecasting reports for free) which ends November 11th.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

7 Comments

7 Responses to “Updating Gold’s Expanding Daily Arc”

  1. Dan de Man Says:

    Hi Corey,

    You probably know this already but Robert Prechter is gold bear. Like you I like to remain neutral but there's nothing better than making quick money on the down side when this golden arc becomes a golden waterfall. When it happens it will probably be a bigger landslide for silver too. It'll be a 2 for 1 sale LOL

    http://www.theglobeandmail.com/globe-investor/e

    All the best,
    Dan

  2. Name Says:

    I can see 5 waves in gold from the last impulse………

    Es tostado soon.

  3. Corey Rosenbloom, CMT Says:

    I actually labeled the 5-wave progression up before taking it down and choosing to focus only on the arc to simplify the chart.

    Absolutely – clean progression up that – if the arc is broken – will be a powerful short-term sell signal, given that yesterday ended in a doji at the upper Bollinger Band (also not shown).

  4. Corey Rosenbloom, CMT Says:

    Thanks Dan!

    Yes, Mr. Prechter believes gold is in a “B” wave that is ending nor or very very soon and then a C wave down is likely. Looking back longer, that does seem to be a logical count, and B waves can make new highs so the new high does not negate this count.

    Much more upside in gold and we'll have to question just how 'corrective' this rally is.

  5. Name Says:

    Corey, thanks for your reply. The $USD is bouncing strongly on the unemployment report. This might be it.

    .

  6. sandew Says:

    “But gold might be the exception, because it represents ‘real money’ and more people are questioning the global paper money system, Prechter is reported to have said on Nov 7th. He believes while commodoties,stocks , debt, emerging markets will slide in wake of possible dollar strength soon; but not gold. (source investment postcards)

  7. sandew Says:

    “But gold might be the exception, because it represents ‘real money’ and more people are questioning the global paper money system, Prechter is reported to have said on Nov 7th. He believes while commodoties,stocks , debt, emerging markets will slide in wake of possible dollar strength soon; but not gold. (source investment postcards)