Just under two weeks ago I updated my subscribers with a chart pattern on the GLD ETF, and in that update we discussed what to look for to find clues in this GOLD consolidation that has continued from last August-September highs. My theory all along has been that we peaked in a “Wave Three” top at 1900-1920 last fall after a Fibonacci 34 month rally from $681 per ounce. The ensuing corrective patterns are part of a normal “Wave 4” consolidation that works off the sentiment and overbought nature of that wave 3 updraft. Following this consolidation, I fully expect GOLD to continue past the $1900 per ounce area and run to $2300 per ounce or higher in a Wave 5 rally into the summer of 2013.
Advice would be to start scaling into long positions on a break over 158 on the GLD ETF and adding on pullbacks along the way up. If we can’t break 158 then the advice is to sit back and watch before acting.
Below is the chart I completed for my subscribers about ten or so days ago, and we continue to use it as our short term indicator for the next leg up or down. Eventually, GOLD will run to all-time highs, we simply would like to time our entry and reduce our risk as much as possible.
If you would like to receive occasional free weekly reports on the SP 500 and GOLD/SILVER, sign up at www.markettrendforecast.com and or take advantage now of a one time 33% off discount code to subscribe and receive updates five days a week.
Courtesy Dave Banister via Chris Vermeulen (EconMatters author archive here)
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
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