After plunging to $1241 a month ago, gold finally managed to reach the $1300 mark again and is currently trading slightly above it. Expecting a recovery of over $60 is not an easy task, especially after a a slump of similar size. Fortunately, to Elliott Wave analysts, “not easy” does not mean impossible. Three weeks ago, on October 17th, we sent our premium clients the following chart.
Gold’s 4-hour chart shows that the precious metal’s rally did not come out of the blue after all. The Wave Principle allowed us to see that the decline between $1375 and $1241 is actually an (a)-(b)-(c) zig-zag correction with a triangle in wave (b). Furthermore, wave (c) was exactly 161.8% the length of wave (a), which made us think the low at $1241 is likely to be a major one. So, while gold was trading around $1251, our clients put their stop-loss orders at $1241, which gave them a buying opportunity with an extremely good risk/reward ratio. The next chart shows how things went.
It looks like easy profits now, but gold did not go up right away. There was a slow and choppy period at first, which could have discouraged many traders. That is where the Wave Principle shines, because it helps you identify a specific stop-loss level and as long as it is safe, the odds are still in you favor. The other things a trader needs are patience and the discipline to stick to the plan. These two vital elements, for better or worse, are entirely in our own hands.
