with Anthony, ZigZag & Platy
I think gold is close to a fantastic buying opportunity, however patience is required. I’m going to look at this problem from a ChangeInTrend perspective and ignore all of the other analysis that you read and hear on the web about GLD:HUI ratios, sentiment, COT reports, i could go on. Not to take away from the confirmatory signals that these tools can provide, however, one must remember that time is the most important ingredient in trading and these tools just cannot provide it.
First of all this special report is going to be fairly short. The reason is, to me the picture is glaringly obvious as to where gold is going in the next month or so. I have spoken before about reactionary waves or impulse waves. These are waves of energy that repeat in a series of 5 mega, major, minor and mini waves. These waves have nothing to do with Elliott Wave mumbo jumbo (non-sense) and the rules are more open to interpretation but generally each mini wave 5 completes a minor wave, each minor wave completes a major wave so on and so forth.
So lets take a look at the chart below. There are a few things going on here so lets look at each one in turn.
Wave Structure. Since the September 2011 high there have been 4 major waves (yellow) each of lower highs and lower lows. So is the bottom in May “THE” bottom. The short answer is no because there is no lower low.
Secondly from a minor wave perspective we have not yet completed wave IV (red) so we are due a bit more upside (same as equities into end of May-early June) before moving down to the final minor wave 5 low completing the major wave 5 low and “THE” bottom in late June.
For the very short term we have just complete mini wave 3 (purple) now looking for a push down to mini wave 4 before completing mini wave 5 and minor wave 4 in late may-early June.
Andrews Pitchfork. The downwards sloping Andrews-Pitchfork has contained the slide since the February top and price is due to approach the mid-fork line at the end of May where i am expecting it to reject thus completing the mini wave 5 and minor wave 4. At this point i expect GLD to begin a mini 5 wave down into minor wave 5 and major wave 5 completion somewhere around the 140 level and the lower Andrews Pitchfork median line.
Cycles. Using the Natural Cycle progression forecast for GLD i managed to incorporate the mini 5 wave down structure within the context of the cycle progression, remember rule 101 from yesterdays post. Also on the above chart i experimented with cycles ranging from 60-65 days drawn from major highs and lows back in June and August 2011. These fixed cycles have done very well at pinpointing important highs and lows.
So you can see from the above the ChangeInTrend method is about combining all of these aspect together to form a picture rather than focusing on one individual component. Its also very important to have a projection for the future in terms of adjusting and formulating a strategy but also being nimble enough to change your strategy should it not play out according to plan. An example is that in the back of my mind the mini wave5 strucutre may actually need to form a higher wave 3 which is in mini wave 5s current position which would send the mini wave 5 projection probably into the 1st week in June instead of late May and will require a rephase. So this is in the back of my mind, but i will be keeping a close eye on that important Andrews Pitchfork to see how price reacts around it. So for the very short term lets see how GLD behaves around the 155.50-156 level where the Andrews pitchfork line resides.