Free-Falling Gold: Chance to Load Up Before Next Rally

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...A similar pattern (to that of platinum) should now develop in gold, as over the next week or so gold should be able to mount a rather tepid rally back up to the $966 area. This rally will not have the same verve and energy as the uptrend we just saw, as this will be a counter-trend rally in a corrective pattern -- a vastly different thing than a primary move in a parabolic growth pattern.

...there were a few very important clues that gold was cycling into a free-fall correction. The most significant clue that gold was changing character was the breakdown below $992, and that's why we had our stop right there.

There is never a big decline in a financial market without this type of early warning. Free-fall declines do not just materialize out of nowhere. There is always a significant breakdown ahead of such a plunge. Always.

You just have to know what to look for.

During a parabolic growth pattern, a market has a tendency to repeatedly come back down to the last breakout spot on the hourly chart, but to not pull back farther than that. If it does go beyond that level, there should be a quick "slingshot" move back to the upside, which serves to re-energize the up trend. So watching the hourly chart is the key to survival in a parabolic growth pattern.

Even if you had no idea that $1,010 was a potentially major target, watching for an hourly breakdown would still have given you early warning that gold was moving into a correction.

The other important thing to know is that a market will typically come back and give one last "kiss goodbye" to the breakdown level prior to the big plunge...

A similar pattern should now develop in gold, as over the next week or so gold should be able to mount a rather tepid rally back up to the $966 area. This rally will not have the same verve and energy as the uptrend we just saw, as this will be a counter-trend rally in a corrective pattern -- a vastly different thing than a primary move in a parabolic growth pattern.

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