ST Outlook – Gold (10 October 2011)

Our ┬áST 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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