Sep 10, 2012

Next Gold Target $2300



In this post I intend to use Eliot Wave Theory, although a bit modified, combined with Fibonacci golden ratio. This kind of combination applied to gold trend gives interesting outcome. Basis for this analysis is the method widely described in Forecasting page. Here I will conduct projection of the waves and set targets. 

First, and most important thing, is determining the first wave and its retracement (correction) – wave 2. This is the foundation of the construction. Considering the fact that wave 3 is the most bullish and longer historical observation shows that its length is around 2.618x the height of wave 1. As seen on the chart the target set by this method in 2009, for example could have given target of $1804 before new correction (wave 4) occurs. The actual peak was $1922. 

Where are we now? Currently the gold is finishing its consolidating correction with Friday’s breakout of the triangle. If the bull attack proves to be successful, as it seems to date, that could mean that we are entering the last wave 5. What level the wave 5 target is. Using the same method for target projection as with wave 1 we could find that level. However here the strength of the last move is lower than the previous bull phase thus target is determined by 1.681x the wave 3 height. Started at $681 and finished at $1922 wave 3 height is $1241. This difference multiplied by 1.618 gives $2008 gain from the basis ($681), hence the target level is $2689. 

Next Gold Target
Next Gold Target
Whether this level is reachable depends on many unforeseen events. However keeping in mind global push for another round of economic stimulus global economy could be flooded with money, which means only one for the precious metals – rise.

More on Gold
Create your own chars with the Charting Tool
Read more...

Sep 4, 2012

Gold in new bull trend



After trading in a triangle consolidation for the last year gold finaly broke the figure in friday. Recent speculations fueled by possibility for another quantitative easing has kept price of gold rising for the last month. If there is actual confirmation for another stimulus shot than there is high possibility for strong gold rally similar to 2009-2011 one.

Wide spread technical pattern confirms that successful breakout of the triangle leads to move with height just as triangle height. The implication from technical point of view is that the next target could be $2000. The target level is formed as projection of the triangle height is added to the breakout level. Thus to break level of $1662 we could see some $461 gain.

The risk for mentioned target is disappointment of eventual QE3 postpone or even rejection, strong dollar and low inflation economic environment.

Next gold target
Next gold target


More on Gold
Create your own chars with the Charting Tool

Read more...
Creative Commons License
This work with autor CapitalHubs.com is licensed under Creative Commons 3.0.