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Gold


Guest kobusk

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Guest kobusk

Gold, according to the incomplete structure is still in "buy the pullbacks" territory short term. The market clearly broke out higher from a triangle and my minimum target is still $1481. I do see any price below $1400 as opportunities to get into longs and I will stay with this bullish view unless $1346 fails. I will only change to a bearish bias below $1265

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Classic EWT analysis @kobusk and concur with a lot of it.  Looks very similar to something I saw elsewhere...

However I have a few additional perspectives for you as follows (note I like to mix EWT with other techniques as I find no single technique is sufficient to capture all the nuances of a market):

  • I do not see why the move down to Dec 2015 is a wave A rather than simply a counter trend rally (A-B-C). which you have too but have called it a large A.  This move ended at the Fib 50%, classic counter trend retrace end point.
  • While the wedge you have was broken the overhanging long term resistance was not (1440).  This must be firmly and conclusively broken (close above and with conviction) for the breakout to be on for me.
  • That A-E wedge classically should have the E hit the lower line or it could be negated (i.e. spurious)
  • I have an alternative EWT labeling for the move since the Dec turn that is the beginning of a longer motive rally that will carry beyond the previous ATHs.  This also does not rely on the wedge formation.
  • The COT for non commercials is too high in my opinion for a rally breakout (commercials, smart money, are net Short heavily).  I trade with the Commercials side on things like Gold (that said I am not shorting, better opportunities elsewhere at present).
  • I would not be Bearish Gold unless it breaks below the LT supporting trend line (circa 1250 minimum) but in that eventuality there would be other more lucrative markets to consider so I will never short Gold.
  • The fundamentals don't really support the larger A-B-C, unless you believe the Central Bank bull will continue for many years to come or this time it is different?  Even then it is a stretch at this point to paint such a picture, albeit still technically possible.  At present I see Gold as breakout to the upside for sure but am not sure it has happened yet.
  • The Russia/China central bank buying spree on Gold theory may be a valid reason for the current rally but for a sustained rally we need a recession, or more likely a deflationary recession, to prompt the safe haven trade.  Not sure we are there quite yet.

I see 3 scenarios:

  1. Gold breaks out from here but I favour a motive wave rather than a B scenario
  2. Gold retraces to the wedge you have for a retest and then either rallies away for that breakout or,
  3. The market carries on into the wedge, negating it, and completes a wave 2 retrace to close a gap (circa 1260) and then rallies.

 

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