Gold

[Samirofi]

Update : 20 August 2013



Good Luck

[Samirofi]

GOLD broke down in the last two sessions, and it seems that the market is in wave iii now, finally heading down to a new low, beneath 1291 and possibly to 1285 as a projection level. 1311 must stay untouched in this case.


GOLD 1h Elliott Wave Analysis

[PCMNewsdesk]

There is little new to add to our recent forecasts for the precious metals. [Gold]'s break of $1240.62 places the yellow metal in Intermediate wave (5). There are two initial target areas for this wave down: one is the $1086.60-$1104.70 range, where wave (5) would be 61.8% of wave (1) and the 50% retracement of the 1999-2011 rally. The other is the $889.50-$956.00 area, where wave (5) and (1) would be equal and the 61.8% retracement of the 1999-2011 advance. It will not be a straight shot lower however, as current bullish gold sentiment is almost non-existent. On Friday, the Daily Sentiment Index declined to just 7%, two ticks from December 19, 2013, when the DSI fell to 5% gold bulls. That day marked the closing low ($1188.83 basis spot) for wave D of (4). There could be another wave to the downside to exhaust the selling pressure, but gold is fast approaching a near-term countertrend rally. The alternate possibility is that the countertrend push will be wave E of (4), as discussed Friday night. We'll address this in more detail if market action warrants.

[PCMNewsdesk]

[Gold] remains in Intermediate wave (5), which started at the $1345.30 high on July 10. The initial target areas for this wave remain $1086.60-$1104.70, where wave (5) would be 61.8% of wave (1) and the 50% retracement of the 1999-2011 rally. And, the $889.50-$956.00 area, where waves (5) and (1) would be equal and the 61.8% retracement of the 1999-2011 advance. Trader sentiment remains extreme, as discussed Monday, so a countertrend rally is on the horizon, whether it starts from current levels or after gold has another wave to the downside to exhaust selling pressure. The alternate possibility is that the countertrend push will be wave E of (4) instead of part of wave (5), but the implications are the same for both scenarios over the near term. A break of the wave B of (4) low at $1184.23 on December 31 would eliminate the alternate count since wave D cannot move below the wave B low.

[PCMNewsdesk]

[Gold] and [Silver] appear to be experiencing the washout decline discussed here on Wednesday. In gold, the wave 4 triangle ended on July 10 at $1345.30. The initial target area for wave (5) remains $1086.60-$1104.70 which is 61.8% of wave (1) and the 50% retracement of the 1999-2011 rally. The next support area is $889.50-$956.00, where waves (5) and (1) would be equal and the 61.8% retracement of the 1999-2011 advance. It remains possible that the triangle is still in play, in which case a rise from near current levels would be wave E of (4) instead of the initial part of a thrust lower. The wave B of (4) low at $1184.23 on December 31 is the key. A break of the B wave low shown on the chart would eliminate this alternate count.

[PCMNewsdesk]

[Gold] declined to $1208.40 today and then jumped to close slightly higher. The Daily Sentiment Index is now at 5%, which is the smallest percentage of bullish gold traders since December 19 (also 5%). That date marked gold's closing low for wave D of (4). When 95% of traders think gold will continue to decline, odds are that the selloff is at or very close to an end. Whether an impending rally is labeled wave 2 of (5) or wave E of (4) matters little at the moment, because both scenarios call for a multi-week-to-multi-month advance. A solid close above $1245 would be the initial signal that a pop higher has started, while "five up" would confirm it. If gold's selling pressure has not completely dissipated, the next downside target surrounds the $1160 level.

[PCMNewsdesk]

Little has changed from our previous discussion of the precious metals. [Gold] is either in Intermediate wave (5), which will be a decline to new lows. The two preliminary targets remain $1086.60-$1104.70, where wave (5) would be 61.8% of wave (1) and the 50% retracement of the 1999-2011 rally, and the $889.50-$956.00 area, where waves (5) and (1) would be equal and the 61.8% retracement of the 1999-2011 advance. Another possibility is that wave D of (4) is making a low now and will lead to wave E of (4). Optimism among gold traders dropped below 10% for four straight days from September 17-22 (trade-futures.com), which suggests strongly that a countertrend rally is fast approaching. If gold is in wave (5), the rally will end at or near $1250-$1270 and lead to even greater selling pressure. If gold is ending wave D of (4), the rally will be wave E and likely carry toward $1300-$1350 to complete wave (4). Thereafter, gold will plunge to new lows. Either way, the bear market is not yet complete.

[PCMNewsdesk]

[Gold] started Intermediate wave (5) at the $1345.30 high on July 10 and the structure is not complete. The two preliminary downside targets remain $1086.60-$1104.70, where wave (5) would be 61.8% of wave (1) and the 50% retracement of the 1999-2011 rally, and the $889.50-$956.00 area, where waves (5) and (1) would be equal and the 61.8% retracement of the 1999-2011 advance. The other possibility is that wave D of (4) is making a low now and will lead to wave E of (4), a multi-week-to-multi-month rally that will carry prices $100-$150 higher. Thereafter, wave (5) will draw gold to the aforementioned targets. Short term, only 5% of gold traders tallied in the Daily Sentiment Index (trade-futures.com) were bullish the yellow metal on September 19. The dearth of bulls suggests strongly that some type of rally is fast approaching to relieve the downside compression. Ultimately, it will prove to be countertrend but short-term gold traders need to be aware of this potential.

[PCMNewsdesk]

Today's relatively tight trading range in [Gold] keeps Friday's analysis intact. To review: Intermediate wave (5) started at the $1345.30 high on July 10 and the structure of this wave is not complete. The two preliminary downside targets remain $1086.60-$1104.70, where wave (5) would be 61.8% of wave (1) and the 50% retracement of the 1999-2011 rally, and the $889.50-$956.00 area, where waves (5) and (1) would be equal, as well as the 61.8% retracement of the 1999-2011 advance. The other possibility is that wave D of (4) is making a low now and will lead to wave E of (4), a multi-week-to-multi-month countertrend rally that will carry prices $100-$150 higher. Thereafter, wave (5) will draw gold to the aforementioned targets. A break of $1184.23 (Dec. 31) would eliminate the latter possibility. At the moment, there are few gold bulls to be found. Today we read a USA Today article from last week that was titled, "Why Warren Buffett Hates Gold." The reality is that the Oracle of Omaha has never liked gold so the fact that the country's largest circulated newspaper chooses now to highlight Buffett's view is another piece of anecdotal evidence that is consistent with the Daily Sentiment Index readings (see Friday STU). Gold's larger trend remains down but a rally is coming which will relieve some of the pessimistic extremes that now attend the yellow metal's three-year bear market.

[PCMNewsdesk]

[Gold] declined to $1204.39 today, which likely completes a small-degree third wave, as shown on the two charts above. The implication is for a fourth-wave bounce and then a fifth wave down to fresh new lows. Near-term resistance is $1235-$1250. A complete five waves down will constitute wave 1 of (5). The other possibility is one that we've discussed before. Wave D of (4) may be ending now, in which case a rally will carry gold $100-$150 higher in wave E of (4). Both interpretations indicate that gold's bear market is not yet complete.