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.

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