Why Gold is About to Power Higher
Source: David Banister, Market Trend Forecast (12/20/10)
"Gold should be poised to power higher near term."
Over the past several weeks, I see a clear Fibonacci trading day relationship on gold's swings from pivot highs to pivot lows. Eight days of correction, 13 days of rally, eight days of correction is the recent pattern over the past five weeks or so. Below is a chart outlining these crowd behavioral based patterns that I rely on for both my trading service and market forecasting services. You can see the clear relationships, confirmed by the stochastics indicators at the tops and bottoms as well:
Based on the recent patterns, I believe we completed a minor wave 3 from the February bottom at $1424 a little over five weeks ago, and had a shallow period of eight days to complete a wave-four to $1,330. Now, we are in the final fifth wave-up pattern to complete an entire five-wave move from February of 2010. In the near term then, I'm expecting a pretty strong rally from this recent $1365 area to at least $1,480 per ounce, and eventually a good shot at completing the structure at a $1525 range. In the short term, we should begin a wave three up here, followed by a fourth wave correction, and then a final and terminal fifth wave. Below is a multi-month weekly chart view of where I see us heading and where we've been.
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