Is the Correction Over in Gold?
Gold has been less rewarding this year than most gold watchers probably hoped. In fact, price overall has gone sideways since mid-2011. To those readers who follow the gold market closely, we hope you are occasionally able to take advantage of the unbiased trader's perspective we try to lend in the articles we post here. Autumn of 2012 favored short positions in gold, or at least favored stepping out of the market.
On October 3, 2012, we posted the following chart for readers here, and we wrote, "If the blue near-term bearish wave count is working, then the sharp rise out of this year's low should meet resistance near $1,794 and/or slightly higher at $1,826."
That was indeed a good opportunity to step aside or to take a short position. At the time, we saw two possible scenarios that could take gold in opposite directions in the larger picture, as shown with the bearish blue-labeled Elliott wave count and the bullish green-labeled count. However, BOTH scenarios suggested that it was time for a downward turn. So, regardless of whether you are overall bullish or bearish for gold, that trading edge should have helped you.
A more extended description of each scenario was also presented in our October 3 article. Even if Elliott wave analysis is not your thing, the earlier article explains how to interpret the two scenarios and what to watch for as evidence favoring either of them.
As you can see, a week after we posted the original chart, price stopped just $4 above the first identified resistance level before embarking on a downward path that has lasted most the season.
Now that the downward move has had time to reveal its character, it does not (yet) look convincingly like an impulsive wave that would mark the beginning of a larger decline. For the bear scenario to start rolling, we would want to see weakness soon - probably this week. Even if price resumes its decline, it is likely to find some support at the levels indicated near 1,668 and 1,628.
At present, we think it is more likely that major weakness will not appear soon, and the bearish scenario will fail to unfold. If price holds in this area, then we will be watching for price to get above a certain level that our subscribers know about as confirmation that there may be an opportunity to resume long positions.
It's so much easier to bring home profits when you take an unbiased view of the markets. Particularly in the case of gold, it's possible to make money going both directions, lapping several times around those who are resolutely holding on to their long-term positions..If you think you could benefit from having these kinds of exits and entries pointed out, consider exploring TOTM with an introductory month-long trial membership. Just $30 gets you full access to our analysis on ALL timeframes ranging from months to minutes, plus access to our live trading room. The opportunity to get guidance and have your questions answered by experienced traders is key to developing a successful trading plan for yourself.
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