   |
||||||||||||||||
Elliott Wave Gold Update XV
|
| Wave a of wave C of wave 2: | $685.7 to $636.7 | - $49.0 | -7.1% |
| Wave c of wave C of wave 2: | $691.4 to $642.1 | - $49.3 | -7.1% |
This is uncanny and very exciting when combined with the strange shape of the complete wave 2 correction. Wave 2 is an extremely rare Irregular A-B-C correction with a skewed upward bias. As explained in an earlier newsletter, this formation occurs because of the very strong bullish forces underlying the market which cause the upward bias. When the corrective forces eventually abate, the underlying strength catapults the market upwards in a rarely witnessed rapid upward move that exceeds almost everyone's expectations. That is what is anticipated in the forthcoming weeks as the strong wave 3 of wave THREE unfolds.
Initial evidence that the gold rocket has cleared the gantry will be when a PM fixing above the recent high point of $691.4 is achieved. Assuming that the gold market is now in the grip of the strong "third of third" wave, it should have no difficulty powering through the erstwhile resistance in the $680 to $700 range.
The 2 Month Forward Comex Gold chart depicts a similar situation:
This chart shows the dramatic breakaway gap above the red down trend line, implying that the correction is over and that the new upward wave 3 has commenced. The percentage declines in the a and c down-waves within wave C of wave 2 are also almost exactly equal, as reflected in these figures:
| Wave a of wave C of wave 2: | $693.4 to $639.9 | - $53.5 | - 7.7% |
| Wave c of wave C of wave 2: | $697.4 to $642.7 | - $54.7 | - 7.8% |
While not precisely equal as in the PM fixings, a single decimal point difference does not detract from the observation that these two down waves are of equal magnitude and thus part of the same corrective wave. This confirms the conclusion drawn from the PM fixings.
The same bullish conclusions mentioned as a result of the PM fixings analysis can be drawn for the Comex 2 Month Forward Gold chart. It appears that wave 3 of wave THREE has commenced and it should be a whopper. Perhaps, more precisely, the wave underway is wave i of wave 3 of wave THREE.
While the immediate bullish forecast can now be assigned a high probability of being proved correct, it is necessary to have some guidelines in case things unexpectedly go pear shaped and don't work out as forecast.
There are two levels that would be of concern if breached on the downside.
Firstly the recent lows at $642.1 for London PM fixings and $642.7 for Comex Gold 2 month forward prices should not be breached on the downside. Prices below these levels would destroy the symmetry of the two down-waves being exactly equal and would cause a cautionary light to start flashing.
Secondly, a breach of $630 on the downside would indicate that more corrective action is possible. In that case a new wave count and forecast will have to be considered.
10 Jul, 2007
Alf Field
Disclosure and Disclaimer Statement: In the interest of full disclosure, the author advises that he is not a disinterested party in that he has personal investments gold and silver bullion, gold and silver mining shares as well as in base metal and energy companies. The author's objective in writing this article is to interest potential investors in this subject to the point where they are encouraged to conduct their own further diligent research. Neither the information nor the opinions expressed should be construed as a solicitation to buy or sell any stock, currency or commodity. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions. The author has neither been paid nor received any other inducement to write this article.
321gold Ltd
