This chart originally published about a year ago anticipating a low being formed around 1150 zone did not get follow though and the price action developed a lager falling wedge resulting in eventual low which now seems to be established in 1050 area.
Due to this protracted agonising ending diagonal chop, it has whipped up bearish frenzy leading to make wild claims like Gold to sub 1000 even figures like 800 or lower being published. One of the reason for this extended sideways chop in my view was entirely due to similar chop in DXY Index. It is notably that in recent Dollar strength gold did not drop much as it progressed towards completing a falling wedge or "Ending Diagonal"
My original view regarding the upside potential has not change overall, namely that of a possible retest of 2011 high or new higher high being achieved. Although it is possible the low we have seem is not final low of what I think is wave 4 low but larger Wave A low. If this is the case, then we might see retracement towards 1500 before reverting back to down cycle.
However, I am of the opinion that we have wave 4 low and are now headed in impulsive wave move towards 2000 zone, because Dollar Index (DXY) also seems to have topped (please see supporting charts below of DXY, USDZAR, USDSGD). Additionally there are other intermarket analysis suggesting significant top for Dollar is now in place with few years of dollar weakness ahead of us.
If this is correct then there is no reason why Gold will fail in its progress in wave 5.
Technical summary: 1. 50% retrace of the move from 2000 low to 2011 high and in the proximity of what was resistance high in 2008 is now potential support in addition to trendline support of line drawn from 1980 high to 2008 high . 2. Support from other Fib confluence shown on the chart. 3. MACD lifting off from having formed flat based along with RSI about to confirm breakout from coiling. 4. Price has now broken out above declining trendline of the falling wedge (Ending Diagonal). 5. The price progression of the low is very impulsive and is developing a supper nesting ie 1,2,i.ii,iii etc. 6. If Dollar has topped as shown in supporting charts below, then it will be supportive for Gold bullish cycle, 7. Seasonally low is formed in Jan for initial lift off which will be partially retraced into April from which intermediate 3 of major wave 5 could develop. 8. Prevailing excessive bearish sentiments calling for drop to 800 or lower.
Conclusion: Even if the low described above is Wave A low we should see rally to 1500 area worth getting involved. a) If you wish to position trade this with reduced risk and still benefit from leverage then consider far out of the money long term Call Options of Call Options Spread on ETF for Gold GLD. My preferred method. b) Alternatively geared play on Gold strength could be capitalised using Gold Mining Stocks or Options on them but these carry additional risk.
Warning: This is my interpretation of price action using TA approach that I consider helps me most5 but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.
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@wxman99, Thankyou. However, I am reviewing this and unless we breakout soon above 1375 we might be larger congestion or retracement of the previous decline from all time high. So it is at critical zone and now needs to prove if the price suggested in the chat is to develop.
sumastardon
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I know it's only T and A but I like it, like it yes i do
DanV
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@sumastardon, Thanks. At the time I felt we were likely in the very early stage of new bullish cycle. However, the price since has been disappointed and could dip much lower. The bearish cycle that commenced in 2011 is still in play. So the bullish cycle is differed fro now and will review this appropriately.
HamedAghajani
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Thanks DanV, The only worry is that wave 4 seems didn't quite retrace to the iv of a lesser degree
DanV
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Thank you for your comment.
Yes I agree with that observation. This is a guideline and not a requirement like a Rule. So it does not have to But it has retraced 50% of prior 2000 low to 2011 high. Secondly if the low is not a wave 4 low but only a Wave A of 4 then we could go up in this bonce as Wave B and then drop in next leg as Wave C which could bring it to wave iv of one lesser degree. That is possible but cannot be confirmed just yet. However, taking in to account other charts and potentially Dollar weakening would lend support to this being Wave 4 low. So we will need more price data to help clarify.
kaysonchan
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Looking at Dollar to see if there is any increase possibility for gold to rally. Currently dollar is still not so bearish. Will take some more time to determine a long action. But anyway good analysis
DanV
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Thank you for your the compliment.
You are absolutely right about Dollar being the key. Whilst all the the charts suggest that Dollar in early stage of reversal, it will be confirmed with more data in due course. Normally wave 1 of the cycle is often confusing which become clearer on wave 2 retracement. So that pull back will be the key in clear identification. Also that would be the safest point to enter in wave 2 completion to participate in strong wave 3 move in the direction of the trend.
Pinkfloyd111.
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Hm, I am not sure that we saw the bottom. The beginning of this last move doesn't seem to be impulsive, it was very choppy and overlapping. And I believe mining industry still need to see some major bankruptcies due to high debt.