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.
What to expect from now on? What is the bigger picture saying? Is gold going to continue even higher or the resistance near $1310 would turn out to be too strong for the bulls to breach? Prepare yourself for whatever is coming. Order your Elliott Wave analysis due out next Monday at our Premium Forecasts section. Stay ahead of the news in any market with the Elliott Wave principle.