Technically Speaking: Gold Nearing Resistance

By: Joseph Russo | Tue, Jul 19, 2011
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July 18, 2011 | 9:00pm ET

Gold Nearing Resistance

As bullish as I am, and have been on Gold since 2003, I am still rather impressed with the latest run-up to fresh highs. To be frank, I was expecting more downside beyond the recent pivot low at 1478, and was a bit surprised at how quickly the shiny metal took out its early May high.

Embracing the most bullish of Elliott Wave subdivisions from the primary 4-wave base at 681 in October of 2008, I am reading the current advance as an intermediate (3) wave along Gold's long journey to toward completing its primary fifth. Once done, the current thrust to fresh highs may mark all-of (3).

It is also quite plausible that the 5th wave at minor degree (currently in progress) may itself subdivide into some type of ending pattern, or trace out five-waves of advance at the minute (one smaller) degree of trend prior to capping wave (3).

Despite Gold rapidly approaching short-term resistance at our noted uptrend channel, bear in mind that 5th waves in the commodities complex do exhibit a tendency to extend.

Gold

In closing, I thought it important to share an extremely short version of my philosophy and application of the Elliott Wave Theory. In brief, I use the fractal geometry of Elliott Waves in the very same way that I use trendlines and trend channels.

Relative to key terminal pivots in specific relation to trendline boundaries of varying size, the art of sequentially labeling these pivots (using the nine fractal degrees resident in the theory) provides me with a superior level of contextual framework from which to best gauge the maturity of trends.

Bear in mind however, that in stark contrast to Einstein's (empirically quantified) Relativity, the tenets of Elliott's principles remain exclusively in the subjective realm of theory, and its efficacy in the hands of the interpreter.

As such, though Elliott Wave Theory is an extraordinarily powerful tool when applied in the proper context, I am forever downplaying its role in my work as nothing more than an ancillary and dynamic method by which to observe price behavior resident within trend channels occurring amid varying timeframes.

In other words, it is not wise to bet the ranch or even trade off of wave counts, which harbor the inherent propensity for dynamic and sudden change.


Technically Speaking Video

I trust and hope that you have extracted something of actionable value from this edition of Technically Speaking.

Until next time,

Trade Better/Invest Smarter

 


Elliott Wave Technology's Near Term Outlook is for those who demand masterfully consistent and objective technical analysis that visually lays out actionable ideas from which to engage the broad markets over the short and near term. The publication is delivered to institutional and private clients each Monday, Wednesday, and Friday evening.

The Near Term Outlook covers 7 essential broad markets.

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NASDAQ-100 | GOLD | CRUDE OIL | BONDS

 


 

Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the dot.com bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

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