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Gold’s 4th Wave Consolidation Nears Completion and Breakout

Commodities / Gold and Silver 2011 Dec 05, 2011 - 08:57 AM GMT

By: David_Banister

Commodities

Back in August with Gold running to parabolic wave 3 sentiment induced highs, I warned of a major top and multi-month correction. We all know that the fundamentals for the shiny metal are stronger than ever, but you must keep in mind that the market prices all that in well l in advance. Coupled with excessively bullish sentiment that was capped off by a USA Today cover with Gold on it, it was easy to see a major sentiment correction and therefore price decline was at hand.


If we fast forward a few months from my then blasphemous call for a top and multi month consolidation, we can see that Gold has lost favor with the taxi driving crowd and the shoe shine group both. What has in fact happened is we have had what I call a 4th wave triangle pattern, which works to consolidate prior gains. Triangle simple let the economics of the underlying security or commodity catch up with the prior bullish price action. In this case, Gold was in a powerful wave 3 stage advance from the October 2008 $681 lows and over a 34 Fibonacci month period of time. When everyone on the stage was convinced this act would continue, it was time for the curtains to draw.

The 4th wave so far has been characterized by a typical pullback in terms of price and also time. The drop to the $1530’s is a normal 31% Fibonacci retracement of the entire 34 month advance. In addition, the pattern that has clearly emerged lines up as a typical 4th wave triangle pattern, which has 5 total waves within. Waves 1, 3, and 5 are down and 2 and 4 are up. We are currently finishing wave 4 to the upside from the low $1600’s and likely to see a wave 5 near term to the downside. As long as Gold holds above $1681 levels, I expect we will see a breakout north of $1775 to confirm that wave 5 up in Gold has begun.

Targets for the 5th and final wave of this suspected 13 year cycle of Gold begin at $2360 and then we will update from there. Below is the chart I sent to my paying subscribers last Thursday and we can see that this pattern is still playing out. Aggressive investors would be wise to get long the metal on this final pullback, with a stop below 1680 to be conservative.

If you would like to have forecasts for price and pivot points in advance on the SP 500, Gold, and Silver that keep you on the right side of the markets, check us out at www.MarketTrendForecast.com

Dave Banister

CIO-Founder
Active Trading Partners, LLC
www.ActiveTradingPartners.com
TheMarketTrendForecast.com

Dave Banister is the Chief Investment Strategist and commentator for ActiveTradingPartners.com.  David has written numerous market forecast articles on various sites (SafeHaven.Com, 321Gold.com, Gold-Eagle.com, TheStreet.Com etc. ) that have proven to be extremely accurate at major junctures.

© 2011 Copyright Dave Banister- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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