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In my most recent few forecasts for subscribers and
public articles I’ve discussed a major correction in Gold, and it
dropped $208 within 3 days of that forecast several weeks ago as Gold traders
will recall. Last week I wrote about further consolidation being required in
what I’m seeing as a either 4th wave likely
“Triangle Pattern” that will consolidate the 34 month run from
$681 to $1910 into August of this year, or a 3 wave “A B C”
pattern. We are right now in some form of C wave, it’s just a matter
now of confirming if we are going to get a “D and E” wave to
follow, or the C wave drops lower before we bottom.
A Triangle pattern serves to let the “economics
of the security” catch up with the prior large movement upwards in
price. In essence, the crowd behavior pushed the price of Gold a bit too high
too fast, and this consolidation pattern lets the fundamentals catch up to
price action. We had a parabolic move I discussed many weeks ago, and those
always end badly to the downside. The $208 drop in three days is a typical
reaction to a spike run like that. At the end of the day though, I had been
forecasting what I call a “Wave 3” top and was looking for a
multi week or multi month consolidation pattern before Gold could move
higher.
Let’s examine what that triangle projection
may look like. They take the form of 5 waves, or what we can call ABCDE in a
pattern. The biggest drop is always the “A” wave, and that was
1910 to 1702 in 3 days or less. The next biggest drop is the “C”
Wave, and that was 1920 to 1793, noting it was a Fibonacci 61.8% drop
relative to the A wave. In other words, each successive wave down in the 5
wave triangle is smaller. This is due to the sentiment finally shifting and
the trading patterns moving from people chasing the hot sector or stock or
metal, to the long term investors accumulating the dips.
If we end up consolidating in a
“Triangle”, then Gold should end up looking something like the
below pattern I drew, with a target of $2,350 per ounce many months out:
The other pattern we are watching for at TMTF is the
ABC Correction pattern. We had the A wave down to 1702, which corrected 50%
of the move from 1480-1910 in 3 days. Rarely do you get a major move down
like that and not get some type of “re-test” of that low, but
because the fundamentals for Gold are strong and getting stronger, we are
favoring the Triangle pattern still as most likely. With that said, there is
a fat and juicy “Gap” sitting in the chart around 1660 on Gold
and dropping down there is what a lot of traders are watching. If that were
to fulfill, then we will see an ABC correction ending around $1643, and then
Gold will begin another multi month rally to new highs:
 
At TheMarketTrendForecast.com I teach people my
crowd behavioral methodologies and give them reliable forecasts in advance so
they can be prepared with their investments. Consider working with us and
following the SP 500, Silver, and Gold by going to www.MarketTrendForecast.com You can take
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David Banister
The Market Trend Forecast
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