Gold Wave Patterns Remain Bearish
Source: David Banister, Market Trend Forecast (1/17/11)
"It's about to get ugly, so strap on your seatbelts."
Gold has been in a bull market since 2001 and there's at least another three years left on this bull run. However, pauses must occur along the way, and this should be a 4th wave corrective Elliott pattern, if my views are right. This is taking the form of a 3-3-5 correction from the $1430 top. We are in the final 5 waves down now, and it's about to get ugly near term so strap on your seatbelts. My chart forecast is below and if I'm right, there will be excellent opportunities to pick up some good juniors and also the precious metals themselves around that $1270-$1280 area. Following this correction, we could have a run to about $1515 per ounce, and I expect this entire pattern to take 6 months to a year to play out from the $1430 top to the $1270-ish bottoms, and back to $1515.
The SP 500 is completing the final 5th wave movement from the 1010 Jul 1st lows this past summer. This is only the first full wave pattern movement of a big 5-wave leg up from July 1st. What this means in English is we have a near term top likely in the 1285-1315 areas, followed by a wave 2 correction to around the 1175-1180 areas. Sentiment right now is running at major extremes last seen at interim peaks in January of 2010 and April of 2010 where I had also forecasted tops within days of the peaks. I am looking for the SP 500 to end up around 1600 on the index after this coming wave 2 correction, but I like to take it one pivot and step at a time. Below is my forecast:
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