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Review of The Elliott Wave/Technical Pattern of Gold

It is probable that the US equity market is involved in a topping process.

Going forward we should monitor Gold.

From the 2011 top, Gold and SPX (SP 500) have been trending in opposite directions if the negative correlation is maintained and the scenario that SPX is approaching a top is correct we should expect Gold to outperform (Safe haven status)


Monthly time frame:

  • The decline from the 2013 low has adopted an overlapping structure that could be forming a Falling Wedge
  • Barring a truncation, theoretically, the pattern still needs one more lower low in order to be completed
  • The Bollinger Band is getting tight suggesting that a large move is in the cards
  • So far we don't have a monthly bullish candlestick
  • In order to at least expect a larger bounce within the boundaries of the converging structure Gold should reclaim the 10 mma = 1218

Monthly Gold Chart
Larger Image

  • Monthly Oscillators are giving mixed signals:

- RSI has a positive divergence since June 2013 : Positive signal

- Stochastic has a bearish cross: Negative signal

- MACD has a slight bullish cross: Positive signal

Monthly Gold Momentum Chart
Larger Image


Weekly time frame:

  • Regardless the scenario of the Falling Wedge if Gold prints an Inside Week candlestick odds should favor a sideways / upward move provided the 20 wma = 1213 is reclaimed
  • An inside candlestick (Harami) in a down trend is a potential bullish candlestick
  • So we have as support last week low = 1174 and as resistance 1213 and 1227

Weekly Gold Chart
Larger Image


Daily time frame:

  • We have a potential bullish Flag
  • After yesterday's wide range body odds should favor some consolidation activity. If the support zone located at the 50 d ma = 1192 holds odds should favor follow through to the upside. If the resistance at 1213 is breached a target at the April peak - 200 dma would be doable.
  • If the Flag pans out the measured target (Equality extension) for he next leg up is located at 1258. Gold would still be inside the potential Falling wedge but it would reclaim the 200 dma which today stands at 1227

Daily Gold Chart
Larger Image

 

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