Bullion Likely to Pull Back, Then Rocket Higher
Source: David Banister, Market Trend Forecast (8/30/10)
"1,300 is on the radar now."
The strength of that countertrend move caused me to go back and review my patterns a few more times. Most of this is pure instinct and experience, but I think $1,155 was the low of the correction. It also looks like that was an A-B-C correction to $1,155; and, with the strong rally, it means we are likely beginning a new set of 5 waves up from $1,155.
That brings us to my recent commentary for my paying subscribers that I was going to review the wave patterns and that we closed our gold trading short position out several days ago with a small profit. It is a good thing we did because gold rallied hard from $1,212–$1,243 since that time, catching some people off guard. At this time, gold is quite overbought and due for a small corrective pattern. It would seem logical that after a rally from $1,155–$1,243 roughly, that we would pull back 38%–50% of that move, so I'm looking for a pullback to around $1,200+, and then a rally. We could see new highs in gold in the next few months, and $1,300 is on the radar now.
In summary, I got the topping call right, the bottom pivot right and the counter rally pretty much right. . .but I'm changing my views to BULLISH intermediately after a pullback, from BEARISH. Obviously, the fundamentals for gold have never been stronger, but I was expecting a deeper correction off the 21-month rally and, instead, to me it looks like with "quantitative easing 2" upon us that gold buyers are really stepping up their gold purchases.
Below is an updated Elliott Wave-based chart showing clear corrective (3-wave) patterns from December 2009 and bullish (5-wave) pattern from February through the June 2010 highs. We just completed a 3-wave correction to $1,155, and now this is probably a short-term peak wave 1 up with a mini-wave 2 down to $1,200 or so to follow. Once done with a pullback, we could see a run to $1,280 or so, and later over $1,300.
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