GOLD & SILVER |
GOLD & SILVER STAGE REVERSAL SIGNATURES TO DEFINE UPTRENDMedia and news agencies have recently published a batch of articles that suggest investor’s appetite for buying precious metals is beginning to wane. Thomson Reuters reported on Thursday 22nd March “Gold hits two-month low on slowdown fears” whilst The Financial Times on Friday 23rd published the headline “Gold loses lustre as investors lured by signs of US recovery” – there we quite a few more like these. It was interesting to witness the timing of these articles especially since gold and silver were both declining quite hard during the previous three week period since both hit a top late February at 1791.16 and 37.53 (respectively). I say this because our latest Elliott Wave analysis for gold and silver revealed a counter-trend zig zag pattern unfolding during this decline. And true to ‘contrarian’ guidelines, as this was approaching a conclusion, the news flow reflected the bearish sentiment of that time, an early indicator of an imminent reversal of trend. Naturally, news flows like this are not always reliable timing indicators, and depending on the ‘degree of trend’ that has been identified, could be off by several weeks, if not months. But even news flows can be assessed in the same hierarchical manner as the degrees of waves evolving in the marketplace. They will correspond to the degree of trend unfolding at the time. For gold and silver, the news flows were not exhibiting a ‘panic’ that would otherwise depict a major low of perhaps primary or cycle degrees of trend, but reflected a more softened ‘bearish’ change of sentiment that corresponded to its Elliott Wave categorisation that labelled the decline in minor degree. That said, a sudden influx of bearish reporting like this, not evident in the previous weeks that coincides with an expected conclusion of a counter-trend decline often provides an excellent signal of impending change – and so it did! Gold – how the low was forecastThe EW-Compass report had already provided some earlier warnings of this imminent change of price direction in the 22nd March issue. Gold was identified as declining from the late February ’12 high of 1791.16 as a counter-trend zig zag pattern as a minor degree 2nd wave – see fig #1. It was labelled subdividing in minute degree, a-b-c with downside targets towards the fib. 61.8% retracement level of the preceding 1st wave advance at 1620.00, max. 1614.15. It was not quite completed at this time, requiring another thirty or more dollar decline. Also of importance was that minute wave c was identified as unfolding into an ending-contracting diagonal pattern, characterised by its three wave zig zag subdivisions within its impulse waves. This was another indication of an up-coming end to the decline from 1791.16. Compare this zig zag decline with the tutorial zig zag chart and see how this archetypal pattern matches gold’s decline both in form and fib-price-ratio measurement – see fig #2.
Now let’s take a look at what happened next – gold finalised the zig zag pattern with a final downswing into the target range at the same time as the news flows reflected an increasing bearish sentiment. Ratio & Proportion guidelines also played a huge part in identifying the exact reversal of trend - extending minute wave a of the zig zag by a fib. 61.8% ratio projected the low for wave c to 1628.11 – this information was updated in the next EW-Compass report created on the 23rd March – see fig #3. The actual low recorded was at 1628.16, just a decimal point from the measured target. At this moment, we awaited price-rejection and a subsequent reversal signature to confirm the completion of the zig zag – sure enough, this has since been qualified. Silver – confirms bullish medium-term uptrendLike gold, silver simultaneously declined into a counter-trend zig zag pattern from the end-February ’12 high of 37.53 as a 2nd wave counter-trend corrective sequence – labelled minor wave ii. two and subdividing a-b-c in minute degree. Its completion was forecast to a low between 31.32-31.04 and published in the 22nd March issue of the EW-Compass, a convergence of fib-price-ratios that identified its most probable reversal level – see fig #4. The visible ending-contracting diagonal in the location of minute wave c increased the probability of silver ending its zig zag decline and then triggering a reversal signature to confirm the resumption of the larger uptrend – compare the zig zag unfolding from 37.53 with the same tutorial zig zag chart in fig #5.
The diagonal pattern as minute wave c was at this stage incomplete, trading at 32.10 and requiring one additional decline into the downside targets zone. But the very next day, prices fell by a dollar an ounce, completing into the low recorded at 31.09 then swiftly undergoing price-rejection that qualified a reversal signature and an end to minor wave ii.’s zig zag decline – see fig #6. After the Reversal SignatureSince the reversal from the 1628.16 and 31.09 lows were confirmed, gold has since traded higher to 1696.00 and silver to 33.25, gains of 4.1% and 6.9% respectively. But more important than this is the way in which the Elliott Wave Principle has been combined with Fibonacci Ratio & Proportion guidelines to define trend, counter-trend and the reversal levels. We are now examining the progress of these successive advances to determine whether a more immediate upswing will continue, ultimately confirming minor wave iii. three is engaged to the upside with price forecasts above 1791.16 and 37.53 and far beyond, or alternatively, wave ii. two is engaged in a more complex double zig zag pattern that will stem the current advance as minute wave x prior to an additional decline into deeper retracement territory of minor wave i. one. This recent example of how the EW-Compass Report combines these methodologies to guide our investment decisions is also applied to the other asset classed that are included in each issue, whether this be stock indices, currencies, bonds or commodities such as crude oil, all obey the same rules and guidelines. For further insights and price-forecasts across each of these four asset classes, subscribe now to the bi-weekly updates of the EW-COMPASS report – just US$32.00 per month! – immediate ONLINE access now!
Sincerely, |
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