A Bearish Turn in Gold

Just a quick note regarding gold. In my September 20th posting I said “…it is the level 3 chart which would trigger sells on all three levels. That is, a break of the FoxPulse3 Beta-X trendline would immediately make this index a 0% bullish allocation!” That has now happened. All five FoxPulse charts are now bearish on gold. Shown is the latest FoxPulse2 chart.

Chuck's Waves - World Gold Index

Long Term World Gold Index (Weekly Chart)

A Cursory Look at The World Gold Index

On the longer time frame charts (not shown) it looks like gold is closer to an ultimate high (in the rally from the 1999 low) than a low, but will have to wait until sometime in 2010 for "the" top.

On the Weekly chart (shown) we have been working on a TD Sequential Sell signal for quite a long time now. The TD Sell Setup was completed on January 16, 2009 and we have just now (September 4, 2009) printed bar #13 of countdown.

While countdown was proceeding, a bearish divergence between the RSI and Composite Index in late February of 2009 led to a pullback. That was followed by a positive reversal signal in these same indicators in April 2009. The associated minimum price objective tied to that positive reversal is 1020.37. So far we have reached 998.

Now that we've printed countdown bar #13 the first question revolves around taking a short position. Should I? And if so, where do I make my entry? The most aggressive action would be to go short now (on the close of bar 13). I would not advise this as there is no confirming RSI/Composite signal and we have not yet fulfilled the already mentioned minimum price objective off of the April low. Let's turn to the daily chart for help.

As of September 4, 2009 we are currently sitting at TD Sequential countdown bar #11. During the coming week it is possible that countdown will complete. If so we will have time-frame confirmation between the daily and weekly. However … we will also have to watch for the possibility that countdown gets canceled on this time frame. That would occur if TD Setup (currently on bar #6) reaches nine bars (or more) and exceeds 1017.

Conclusion: Although we have reached TD Sequential Countdown bar #13 on the weekly chart, it is a bit premature to short the gold market here. Let’s see how the coming week unfolds. Longer-term, if a significant pullback does unfold here it might be a final opportunity for traders to get long the precious yellow.

I will try to update this analysis periodically.

Gold Update!

Today I present an update of my Elliott Wave count on the World Gold Index last presented way back on December 14, 2007 (in the archives). At that time I had gold just finishing wave iv of 3 of (5) of III.

Today’s chart shows that I believe wave 3 completed in early 2008 and the larger wave 5 in March of 2008. This also ended the larger wave III rally from early 2001. Since March of 2008 we have traced out A and B of wave IV. As I believe that the large corrective wave IV has not yet completed I can’t be a gold bull here like so many others.

Short term I think we will retest the recent B-wave high near 1,000 dollars but will fail. Then gold starts dropping over the coming months with a minimum of target of $700! What do you think about that?