First of all, before starting the analytical part of this article, we at EWM Interactive, would like to express our condolences to all relatives and friends of the 295 people, who found their death in this terrible tragedy.
Can you predict the news of tomorrow? Well, we cannot either. On July 15th we showed you a forecast of gold, saying that “the decline from 1345 is clearly a five-wave impulse. According to the Theory, after every impulse, a correction follows. That is why we expect a three-wave rally now for wave (2)/B”. This statement was based on the following chart.
“The tragic crash of a Malaysia Airlines jet with 295 passengers in eastern Ukraine sparked a rush toward safe-haven assets like gold” – MarketWatch, July 17th 2014 –
Indeed, gold rose by 1,3% yesterday, but if the reason for this really was the plane crash, how did we predict it two days earlier? We certainly do not see in the future and we cannot make such prophecies. The answer is in the nature of markets, which The Elliott Wave Principle understands quite well. On the next chart you will see how the situation has been developing during the last three days.
The chart depicts that yesterday’s rise of gold was nothing more than a part of the natural wave (2)/B retracement of the previous (1)/A impulse. It has nothing to do with the plane tragedy in Ukraine. Furthermore, pay attention to where prices found resistance – exactly at the 61.8% Fibonacci level. Would you expect such a precision from panicked investors seeking for safe-havens?
Now, the stage is set for another decline in the price of gold and if take a look on the big picture, it could be a massive one.
