Gold Projection by the Golden Ratio

By: Trader MC | Tue, Mar 25, 2014
Print Email

This article shows how Gold has been following the Golden Ratio which predicted all the major turning points with a high degree of accuracy for the past thirty years, and reveals the next possible major turning points. The Golden Ratio 1.618034... (also called the Golden Number, the Golden Section or the Golden Mean) can be found everywhere around us from mathematics to architecture, from nature to our own anatomy. But as you can see in the following analysis, it can also be found in the Gold Metal Charts.

The first chart presents the Secular Bear Market from 1980 to 1999 and the Cyclical Bull Market from 1999 to 2011 and shows how they are connected to the Golden Ratio 1.618. Firstly, you can see that the three most important turning points (1980 top - 1999 low - 2011 top) had a time duration which is accurately connected to the Golden Ratio. It is also interesting to note that the Golden Ratio has an inverse correlation with the previous turning point (high-low-high).

Secondly, the first leg up of the Cyclical Bull Market from the low on August 25, 1999 to the top of March 17, 2008 predicted exactly the low on June 28, 2013. Here again, the Golden Ratio has an inverse correlation with the previous turning point (low-high-low).

Thirdly, the second leg up of the Cyclical Bull Market - from the low on October 24, 2008, to the top on September 6, 2011 - pinpointed also the low on June 28, 2013 and once again, the correlation is inverted (low-high-low).

GOLDEN RATIO 1980 2014 CHART MAR 25
Larger Image

The next chart shows the Cyclical Bear Market from the 2011 top to the 2013 low. A look at the time duration of the tops and lows of this bear market reveals that it has an inverse correlation with the Golden Ratio. Contrary to the bull market, the bear market follows the 0.62 ratio which is the inverse of the Golden Ratio (1/1.618=0.62). We can also notice that the alternate relation between highs and lows is broken (high-low-low).

GOLDEN RATIO BEAR MARKET CHART MAR 25
Larger Image

As we can see, every turning point has been predicted by the Golden Ratio for the last thirty years. The charts are showing that these turning points did not happen by coincidence but followed a precise Golden Ratio road map. This ratio can therefore also be used to project the next important market turning points.

On the following charts you can see a projection upon studying the tops and lows of the previous bull and bear markets. The entire leg up of the Cyclical Bull Market from the low on August 25, 1999 to the top on September 6, 2011, is pinpointing an important market turn date during the last week of January 2019. As history has shown, the Golden Number had an inverse correlation with the previous tops or lows, so odds favor that the last week of January 2019 could be a major low which will be reversed by the September 6, 2011 high.

GOLDEN RATIO BULL MARKET PROJECTION CHART MAR 25
Larger Image

As for the Cyclical Bear Market from the 2011 high to the 2013 low, two possible turning points could be forecast, since I also take into account the Inverse Golden Ratio which pinpointed the highs and lows of the previous bear market.

We can see that the first turning point could happen during the first week of August 2014 (Golden Ratio) and the second one during the third week of May 2016 (Inverse Golden Ratio). Based on the Golden Ratio study, the first week of August 2014 could be a top, as the Golden Ratio sequence has usually an inverse correlation with the previous turning point (the low on June 28, 2013).

As for the third week of May 2016, history has shown that the Inverse Golden Ratio 0.62 keeps the same characteristic of the previous turning point. In that case the third week of May 2016 could be a low, as the previous turning point on 28 June, 2013 was a low.

GOLDEN RATIO BEAR MARKET PROJECTION CHART MAR 25
Larger Image

However, it is important to note that the history also reveals that turning point sequences can be broken whether we are in a cyclical bull or a cyclical bear market. Therefore I think that the most important is to watch how the price action will approach these turning points (in an uptrend or in a downtrend) and be prepared for a trend change.

If the Golden Ratio has an important role for the time period, my analyses on Gold prices also reveals that prices of both legs up of the Cyclical Bull Market and of both legs down of the Cyclical Bear Market are connected to the Golden Ratio 1.618.

The Correlation of Price is a little less accurate than the one for Time Duration but it is still very relevant. A measure move with round numbers of the first leg up and the second leg up of the Cyclical Bull Market presents that both legs up have a price ratio of 1.59 which is very close to 1.618. The two legs down of the bear market are also very close to the Golden Ratio (7 points less than 1.62).

GOLDEN RATIO GOLD PRICES CHART MAR 25
Larger Image

As far as Gold prices are holding above the Symmetry Guideline and Silver holds above its thirty years Base Pattern Neckline (as shown on the two charts below, also published in "2014 - The Year of Commodities"), the Secular Bull Market is still intact. In that case we could expect another leg up with a measure move between (the Golden Number) X (measure move of the Cyclical Bull Market) and (the Inverse Golden Number) X (measure move of the Cyclical Bull Market):

1.618 X (1921-252) = 2700

0.62 X (1921-252) = 1035

This leg up could therefore send prices to a range between $2215 and $3880 from the low at $1180. For the moment we need to see further development in the price action to confirm a new leg up.

GOLD BIG PICTURE CHART UPDATE MAR 26
Larger Image

SILVER BIG PICTURE UPDATE MAR 26
Larger Image

As all the major turning points were predicted by the Golden Ratio both in terms of Price and Time, we can also note that Gold Time Duration is well balanced. The second leg up of the bull market lasted three times less that the first leg up, whereas the second correction lasted three times longer than the first one. The dynamic symmetry is therefore completed. The geometry of Time Dimension has an important role in the market structure, as the market likes geometry both in Price and Time.

SYMMETRY TIME DURATION CHART MAR 25
Larger Image

The Golden Ratio has accurately predicted all the Gold major turning points these last thirty years and it seems reliable for making future projections. It is one of the techniques that can be used but the most important is to understand the structure and the rhythm of the market to forecast future developments not only in terms of the dimension of Price but also of the dimension of Time. In order to gain superior returns, it is essential to study the history of the market and to follow the price action.

 


 

Trader MC

Author: Trader MC

Trader MC
http://tradermc.com

There is no Holy Grail in trading, but I have found that compared to all other professional methods the Technique of Cycles is the only one that greatly improves the probability of success. All Market Assets rise and fall in Cycles. Acknowledging the Power of Cycles improves market timing and increases profits. Fortunes are made by identifying a change of trend and identifying a Cycle is the most powerful and the fastest way to do that. Cycle Highs and Lows of most Markets can be identified and most of all, only Cycles will allow adding the element of time and give a big edge in achieving superior returns.

I decided to create this blog in order to help as many traders as possible to stay in the direction of the trend, make substantial profits with low risk trades and get their freedom secured by financial independence. My trades are of Intermediate Term (3-6 months) and I always use Stops to protect the capital. I devote myself entirely to trading and therefore there is no forum on this blog.

My analysis covers different assets - Market Indexes, such as US, Europe, Emerging Markets, China, Russia etc., Commodities, Currencies (Forex Trading), Bonds and Rates. In addition to the Markets Updates for MC Members, I also post real-time Trading Alerts for MC Leveraged Members for a more aggressive strategy in all the sectors. Besides the market analysis, this site also contains Cycles Count Updates for all Market Assets, including the Forex Market.

My Cycles' tool completed sometimes with institutional technical analyses helps me to determine future Price Action and tells me not only what is most likely to occur in the future but when will it likely occur. Cyclescan accuratelyidentify a change of trend and accuratelytime the buys and sells signals to maximize profits and avoid getting whipsawed too many times. Respecting Price Action and setting up the best odds is Key to be successful in trading.

I sometimes also use sentiment indicators as markets are driven by emotions (hopes, fear, greed, euphoria...) and emotions run in Cycles. Based on the sentiment, the majority of traders think the risk is the highest when something is down. That is why most people do not make money in trading and they have no idea why they failed. The Psychology of the Market is similar to how the crowd deals with emotions, it plays out over and over and speculators use it in their favor. Following Cycles is a true understanding of trends and avoids decisions based on emotional status.

My goal is also to show the importance of knowing and following the Rules. The single biggest way traders lose money is by not following the rules, thinking that this one time there is an exception. Executing the rules is sometimes painful, but essential in order to protect the capital. It is also important not to forget that Patience is key in trading -wealthy traders are patient and spend most of the time watching and waiting patiently for all the factors to come into play in their favor. A longer timeframe increases the chance of success and brings large profits with excellent trading opportunities.

My published studies are not only for the Institutional Investors Community but also for the Individual Investors who want to get a serious edge on the financial market. The Learning Center explains the basic functionalities and definitions of Cycles which helps to better understand my analysis and also to learn how to trade with Cycles. The goal of my website is to help both Institutional Investors and Retailers in the process of finding their freedom.

A constant study of the market is hard work, but it is a source of pleasure for me. Trading is my freedom, but my real happiness comes from the process of the work itself, not from the money that may come with it. The essence of success requires a constant process of learning and growing. The easiest way to make big money is to jump on board the Cyclical Bull Market and those who use Cycles and control their emotions, staying focused on the big picture, will become fabulously wealthy.

LEGAL DISCLAIMER: Cycle Trader MC OU is not a registered investment firm or a financial institution. Any opinions, news, research, analyses, prices, or other information contained on this website and any messages sent from Tradermc.com and/or by Cycle Trader MC OU are prepared for informational and educational purposes only and do not in no means constitute investment, financial, legal or other advice. The content disclosed express personal opinion of the authors at the time of writing and is not a solicitation, or an offer to buy or sell any security, make financial transactions or use any particular trading system or to act in any other way. The information delivered is based on best research using data believed to be reliable, but there is no guarantee as to its accuracy and Cycle Trader MC OU shall bear no direct or indirect responsibility for any errors or omissions. From time to time, Cycle Trader MC OU and the owners and operators of Tradermc.com may hold positions in some or all or any of the securities mentioned, but are under no obligation to hold such positions. Cycle Trader MC OU will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on information delivered by Cycle Trader MC OU or third parties through use of Tradermc.com. The website and any of the messages will not provide readers with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio, transaction, investment strategy or other matter. By accessing or otherwise using this website, you are deemed to have read, understood and accepted this disclaimer.

Copyright © 2014 Trader MC

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/