ST Outlook – Gold (10 October 2011)

Our  ST Outlook posts have been getting longer and longer as the markets become more fascinating (and volatile) with each passing week. And so today’s brief comments on Gold might be a relief!

Last week I discussed the peak in Gold of 6 September 2011, and whether that peak was of 18-month magnitude or 54-month magnitude. It will of course be some time before that issue is decided, and recent price action in Gold has been fairly directionless, behaving in a very “corrective wave” fashion in Elliott Wave terms, which would indicate that the trend is still downwards.

Price "riding up" the 20-week FLD

And our Sentient Trader analysis of course agrees with this: the price of Gold peaked on 6 September 2011 and is headed downwards. As can be seen in the chart above price is currently rising into a 40-day cycle peak (optimistically placed by Sentient Trader above the $1700 level). The time for this peak is right about now: 34 days have elapsed since the 6 September 2011 peak, and that is the average length of the nominal 40-day cycle.

Notice how price seems to be “riding up” the 20-week FLD? This is something that happens often, and which I have mentioned several times before in these ST Outlooks. Of course if the peak of 6 September 2011 is of at least 20-week magnitude (as I believe it is) then at some point fairly soon the support provided by the 20-week FLD will disappear and price will plunge through the FLD to the downside. Sentient Trader is expecting this to happen in the next 40-day cycle move down, as can be seen by the green-filled projection box below the 20-week FLD. I know many people who are expecting better things of Gold, but regrettably the cycles don’t offer much hope.

About David Hickson

I have been trading for over 20 years, but only had any success after discovering Hurst's cyclic principles. Unable to find any software to speed up the analysis process I created Sentient Trader software, which now pretty much does all the analysis for me. I am a film maker and a TV director, but nowadays I mostly provide consultation services to professional traders and fund managers, helping them to integrate Hurst analysis into their trading. I'm South African and live with my family in Italy.

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