Gold has reached an interesting apex within the past week or so. The once unthinkable $900 mark has been breached, but...do I hear $1000? Yesterday's $46 range has left all of us with some question marks in this market. Let's take a look at what we DO know, and see if this sheds any light on where the end of the rainbow is.
Elliott Wave Theory suggests that this is our Wave 5. We know that most major market trends terminate after this wave due to the exhaustion of the trend's momentum. However, in the case of Gold on the Daily chart, the Oscillator shows that the momentum is actually INCREASING! It is larger than the momentum we had during the monumentous Wave 3 of August through November. That would suggest that the Wave 5 has the potential to continue higher, and then be relabeled as a continuation of the original 3. To further foster this thinking, we have broken above the MOB level attained from the previous 3, and used it as support in yesterday's massive head-fake down. All of this supports higher prices in Gold.
Now for the flip-side. At our Wave 5 high, we met up with the 1X1 Gann angle from my long-term Gann Box. This is the UPward 1X1 angle that will continue to ascend. We are above the DOWNward 1X1 angle, and, along with the MOB, continue to use it as support. Thus we get somewhat of an oscillation between these two levels. This could mean some range-trading for awhile until Gold decides which direction it wants to go.
Fueling the fire for change in this market is an epic alignment of Fibonacci Time. If we take the high pivots of Waves 1 and 3 as our two points on the Daily chart, 1.618, the Golden Fibonacci number, lines up one bar away from our all-time high in Gold. This would suggest that something important was to happen at this point in time. This alignment of time, coupled with he alignment in price AND time with the Gann 1X1 suggests that this may be the end of the rocket-like ride in Gold.
So, while the Elliott suggests that we may see higher prices, the historic support/resistance methods of Gann and Fibonacci suggest that the overall trend may be over. So where does that leave us? Well, technically speaking, it is IMPOSSIBLE to ever find the end of a rainbow. All we can do with Gold is be prepared, understand where the important prices are, and react with whatever setup is presented. An educated trader is usually a more profitable trader. Even if you want to count on luck...luck favors the prepared!
-Nate McCartney
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