“If this is the correct count, the support zone around 1180 may finally surrender… for a while.” We said that more than two weeks ago, on October 14th, when we showed you our primary forecast of gold. In “Is Another Decline Coming for Gold?” we were expecting the completion of wave (4) to the upside and the resumption of the downtrend in wave (5). Below you will see a chart of gold as it was 17 days ago.
We thought wave (5) should begin soon, because according to the Elliott Wave Principle trends move in five-wave impulsive sequences. The next chart will demonstrate what has happened to the price of gold after that forecast.
As visible, gold went a little higher than expected, but did not violate the rule, which states that waves (1) and (4) must not overlap in terms of price. $1255 proved to be a strong enough resistance for wave (4) to end and wave (5) to begin. Gold is currently trading $1170, which means the support of $1180 has finally been taken out. To the majority of people this may look like a good selling entry, but in our opinion it is not. The Wave Principle states that every five-wave sequence is followed by a three-wave correction in the opposite direction. Gold seems to be in the final stages of its five-wave decline. In other words, chances are good that gold would start recovering soon and nobody wants to sell at the bottom, right?
