Wednesday, 14 October 2015

Gold's rally looking shaky in the short term as the Waves get choppy

For some months, since Gold was below 1100, I have published a target for Gold's current rally of 1250+, around the mid-channel line of the weekly chart, as shown below with an aggressively bullish projection. I have seen no evidence that makes me doubt the mid channel target, but I think there is a good chance that Gold will correct back to around 1100 before a strong surge higher.

Why the change of expectation? From early August I tracked and many times posted a bullish Elliott Wave count, which has served well until recently. An up to date price chart with that wave count is shown below. Wave 3 should be the strongest wave of the sequence, and quite clearly it is not, instead it is choppy and corrective in appearance. So, some alternate scenario is likely to be underway. What could it be?

The final chart shows the count that to me looks most likely. It is ultimately bullish so long as the July low is not broken, but projects a correction back to around 1100 in coming weeks. Following that correction Gold would launch strongly higher. Let's see.