Sunday, August 25, 2013

MMM Weekend Update 8-25-13

Gold - Several weeks ago in June I posted this LT chart with a Mega-Bear scenario looking for an end to wave (C) orange in the 1150 to 1280 zone. With price challenging the 1400, it looks like wave (C) is finished and now the price is working up into wave (X) orange toward the very key 'Thick Black Line', which is currently above at about 1691ish and falling. If this is a wave (X) advance it should be a sharp 3 wave correction upward.

Now some of you have been wondering if there is a Mega-Bull best case scenario. Of course there is, but the 'Thick Black Line' will need to be defeated first as the green arrow depicts. Here is the Best Case scenario that I can fathom once the TBL is trounced: A 5 wave impulsive advance to 1800+ for wave {1} will need to be realized. Followed by a couple sharp, but relatively small wave 2 corrections. Then comes the point of recognition, probably in the 2500 to 3500 zone, the price would just go steadily upward day after day, 1-3% at a time, with no looking back.

Here is what the wave structure looks like in log scale, you'll notice that the current correction is either a bullish under-throw or just the start of a more drawn out correction. Until the TBL is defeated I favor further correction (red projection)at this time, eventually dropping down to the previous wave 3-4 zone and possibly the LT 61.8% fibo retrace (889ish):

I do not recommend that you base ANY long term investing decisions base on these long term scenarios. If you are a long term investor in precious metals the best plan is to continue averaging in purchases over time. Betting the farm on a EW projection is typically not the best course of action. MT and ST paper trading is different, you have greater flexibility and can maneuver an account with greater dexterity capitalizing on swings up and down with the advantage of using stops. You can't place a stop-loss on a 1oz American Gold Eagle in your hand, though you can employ hedging using a paper trading account.

Currently PoG is coming up to test several lines of potential resistance:

Gold is still inside its base channel. This means the the current 3 legged advance up from 1180.20 could be just a corrective wave. What would set this upward wave structure apart as an impulsive rise would be to have the price move above its base channel and form a new acceleration channel (orange), no doubt generating a point of recognition. The Key MT support level at this time is 1352ish.


Silver - Is much further ahead than gold, having already broken its base channel (blue), headlong up into its acceleration channel (orange):

Silver is also about to knock on a MT fibo retrace level of 38.2% (24.77ish), as well as test some other resistive trend lines which form a resistance zone. This would be the place to watch for daily topping candles such as an inverted hammer, OKR or bearish Harami. Further ascent this week may also give the New York trading hours another crack at the 24.59 to 25.91 Dead zone, which has not traded in the NY time frame. Keep in mind that this rapid climb has left behind a NY Dead zone below at 20.50ish to 20.86. The market often despises a vacuum.


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Good Hunting,
Quad G