Gold - The move down from 1912 (spot) has now exceeded the 8% mark and outside the previous wave 3-4 zone with a move below 1722. This is now moving into a level of correction that may take months instead of weeks to recover from.
Many have often heard me mention the 1-3% zone, 5-8% zone, 12-15% zone, and then the 25-38% zone. These zones mark the magnitude of various corrections, each with their own consequences:
1-3% correction - Typically takes a few days to recover.
5-8% correction - Typically takes a few weeks to recover.
12-15% correction - Typically takes a few months to recover.
25-38% correction - typically takes 1-2 years to recover.
With the 8% level exceeded, further selling into the 12-15% area would mark (at a minimum) a month or more of recovery before new highs are seen. However, such a move would be very odd for this time in the seasonals, never before since the bull market started in 1999 has August been a significant topping month.
Considering the 12-15% correction window, we can see various other support levels with-in that zone:
The gap support and 61.8% fibo retrace level are also in this 12-15% area.
I mentioned the weekly turn date window for Gold that started last week of the 14th, along with the daily turn date window around the 18th has initiated this significant turn. Most of those turn weeks have produced swings lasting 4 weeks to dozens of weeks.
This turn may be no exception. This is why I would have preferred a low into that turn date instead of a high, but I do not get to decide these things.
The EW pattern up from the 1999 bull market low is also technically complete with a full set of waves, it is entirely possible that a major top in Gold has been finished. However it cannot be confirmed until Gold moves below 1478. The MT structure that I have favored, pointing to gold hitting 2500-2700 by 1st quarter 2012 will be in jeopardy if Gold moves below the 61.8% fibo retrace level at 1643. Gold will also need to make a choppy 3 wave structure moving down into this support area 1606 to 1682, a 5 wave impulsive structure into or exceeding this support zone would be very bearish to the long term picture.
Silver is showing some strength here, while gold falls much lower. The GSR has kept under the key resistance of 45.20, but is at a point where it needs to fall back down to 40 sharply very soon or risk further upside.
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