Forecasting Direction, Price, and Profit Targets

By: Joseph Russo | Fri, Feb 3, 2012
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In every market and timeframe of interest, exceptional artistry in the proper interpretation of Elliott Waves in concert with an adept and impartial compliment of cold hard technical analysis provides an essential calm, clarity, and a sense of purpose that is essential in effectively laying out a roadmap, which can accurately forecast market direction, price, and specific profit targets.

Using two recent excerpts from the Near Term Outlook and one older excerpt from the Position Traders Perspective, we use the recent price action in Gold to provide an example of how we share such artistry.

Long-Term Forecasting

We have been tracking the price of Gold for decades. In October of 2010, we documented our body of work in a video entitled "IMPULSE-24kt Gold." In it, we eluded to an outstanding upside price target we had in place for a price of $1495. One year later Gold subsequently met and surpassed that objective.

In early 2011, we presented the chart below to our Position Traders Perspective members. In it, we illustrated a minimum price and time target for our long-standing $1495 target for September of 2011. At the time, Gold had recently plummeted more than $90 an ounce from a high of $1431.90.

Beyond our minimum upside price target of $1495, we had also set a maximum time and target window for September 2011, which opened at $1463 and closed at $1935.46 on the high end.

On September 6, 2011, Gold reached its current historic print high at a price of $1922.60 - just $12.86 and less than 1% from our topside target for September.

Gold Secular Trend 6mos Forecast for Sept 2011 High

Medium-Term Analysis

In just 14-sessions following its $1922.60 print-high in September of 2011, the Gold price collapsed, dropping $384 shedding nearly 20% of its value. By November, Gold had clawed its way back up toward the $1800 level, which we interpreted as a 'b' wave rally at minor degree, which strongly suggested there was still another shoe to drop on the downside.

In late November of 2011, our daily chart studies drew a line in the sand that outlined boundary to a sell-trigger harboring prospects for a $150 decline in the Gold price. On December 12 of last year, price breached beneath that boundary citing a price target for wave 'c' of (4) at a minimum downside price objective of $1550 per ounce.

Just 12-session later on December 29, from a price of $1700, Gold was slammed back down and tagged our $1550 target and then some, making its pivotal low at the $1522.60 level.


Short-Term Trading

Just 5-sessions after printing its pivotal $1522.60 low, we observed a rather telling bullish reaction. We immediately drew another line in the sand, this time a short-term buy-trigger, and presented it to our Near Term Outlook subscribers, which cited $113 dollars of upside upon a breakout above it.

Four days later on January 10, the line was crossed, electing long positions seeking an upside price target of $1742. Void of any trade drawdown by February 2, Gold hit our resting limit orders to exit and we collected $11,300 per contract as Gold sailed well beyond our $1742 target on the back of Bernanke's recent inflationary reiterations.

NTO Gold 1742 Target

Check Emotions at the door and Keep Your Eyes on the Charts

Sounds and looks easy enough, does it not. Well, as you probably already know, it is not as easy as it looks or sounds. You can stare at charts 24/7 and still have no solid clue as to what you are looking at or what it means.

With practice, you may improve over time but you may also find that your bias (where you emotionally want price to go) is heavily influencing what you are reading in the tealeaves through your newfound talents.

A consistent and reflexive discipline to detach and interpret price behavior impartially is essential - it's what separates the men from the boys. It's what we do here year in and year out. Come join us for a few sessions and see for yourself, the first three sessions are free. Your free three-day trial may take your trading game up a notch or two, and in the process, you might just conclude that it's well worth your while to stick around and become a permanent member, you have nothing to lose.

Until next time,

Trade Better / Invest Smarter



Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the 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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