It is always a tough call to say we will get a 30% sell-off when all systems are pointing higher. However, as a battle-scarred veteran practcing Elliott Wave analysis for over 25 years, I will be remiss if I don’t point out that Gold is in its fifth wave within an extending 5th , and there is a fairly good chance that we have actually finished the 5th already at the high of 1575 seen a few sessions ago. Typically, when a move finishes with an extending fifth wave, Elliott Wave principle suggests that we will get a swift sell off to the second wave within the fifth. This level for Gold corresponds to 1155. However, there is a risk in that we often get a full-blown 2nd retarcement of the first sell off before we collapse. This is the reason why I urge traders to be ready to turn short at the first smell of bears now! A perfect place to go looking for the bear will be near the prior high, perhaps even marginally higher than that, say at 1588. But when the selling begins, it is going to be a rout! So at the very least, be sure not to get caught long.
Disclaimer: I have also been wrong. But I have been right more often than not. This blog has records of all my past glories and gaffes.
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30 Comments
Dear Ramki, with your potential projection of both Oil and Gold, and the fact that equity markets have trended very closely to both, should we expect a similar trend to develop in the equity markets?
Hi Bob, I haven’t done the correlation analysis. Hence don’t know the answer. Which index are you specifically referring to? Will try and look it up from EW point of view.
Sorry Ramki….with so many markets to choose from, I should have been specific. Answer: I viewed today your January 2011 post on the condition of the Dow Jones Industrials and in review of that market index, along with your illuminating Oil and Gold post today….I can’t help but think the Dow Jones/S&P 500 would trade very similarly to Gold & Oil and decline back to the July 2010 low.
There you go. Another fine example of how five wave moves of any degree, works/comes within ticks to a summation series number. In Gold’s case, the 5th wave target is close to the summation series number of 1584. Now we may or may not see that number, but one thing is sure. If as an Elliott Wave trader we keep these summation series numbers in mind, than working to find more specific targets using wave patterns, falling within purview of summations series, gives us multiple targets as well as the cushion of having safety nets called stop losses.
Ramki…great call on gold!!! I think the BTD folks are going to be sorry.
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Hello Ramki…..I read with great interest your position/expectation for Gold. You have provided us with a road map, which can offer many ways to arrive at our destination, but has direction and requires decisions along the way, just like our own lives. I can see that Elliott Wave Analysis can enhance ones life through it’s application in trading markets. Applying the same principles of controlled trading, to ones way of living, should bring inner peace and harmony, along with the excitement of accepting new challenges. You are a rare human being Ramki. I must have done something right in my life to have occasioned across your website. Lucky for me and all that receive your wisdom.
Bob, you are being too kind. Thank you.
Great call on Gold. Look forward to your latest analysis on INR/USD and UAE Stock Markets.
An Update to the Gold analysis would be much appreciated.
Imtiyaz, Thanks. Am just a bit tied up lately, but will try and look up the UAE mkt soon.
This is an amazing call…that too amidst every one being a bull on gold.
Pankaj, thanks, but real joy comes when we do a ‘silver’ on Gold! ie reach the downside targets. Let us see.
i second bobs comments…..im a lucky guy
sir what is sl for gold sell
Hello Harsh, It is still not the time to sell Gold! I am bearish for it later on. Please read my post again.
sir ,thanx for reply but my questiion is still same that after reach to 1588 then what is sl for gold sell
Harsh, we will wait for the first 5 wave down move and sell a 50% pullback with stops above the high posted
Sir,
I have been viewing your comments since last couple of month or so.
Brief : Residing at Mumbai. Professionally a CA. And now having some training session on Elliot Wave/NEOWAVE at Mumbai.
Sir, I would appreciate if u can please guide us with regards to GOLD as of now (current market price : US $ 1540.00).
Can we assume that as per your view, gold had made TOP 1558 (yesterdays high) as a pullback to the fall and now can we be bears for your dip dip target of 1155. ThanK You
Sachin, While I remain cautious about Gold at these lofty levels (given my expectation for a topping out around 1575), it is still too early to call the top. Short term support lies at 1518 and then at 1480. Most probably we will see one more attempt higher after reaching 1480. Briefly, don’t be impatient to sell. You will have lots of time to sell later and still capture a nice profit.
Sachin, this decline now looks like the real thing!! Gold just reached 1518.40 as I am writing this update on my earlier comment. If we break 1475, the damage will be permanent, and while we should still expect a recovery later on, most people will be only too anxious to sell thereafter. Let this experience serve as a reminder to those who wait for the absolute top that they often miss the bus.
Hi Sirji,
Greetings !
Thanks very much for the update and valuable time. Its very valuable for me and others.
Sir, where should we initiate short and SL for the same, at present scenario.
Thanks.
Hi Sachin, Glad you find wavetimes useful. At present I am not offering any trading advice!
Dear Sir,
Sir , I would be most appreciated if you can guide us,whether we should sell the gold we have now at this present price & wait until 1475 then repurchase again ? or should I still hold them & wait until 1575 ?? My gold price is around $ 1450 in average. What to do?
Thank you.
Hi Sanpis, whether you are an investor or trader, you need to know before hand where you plan to exit a position. I have been suggesting a top in gold around 1575 long before it got there ( you can look at all the posts under Gold). Trouble is, there is no guarantee that any of my calls will work. So one has to make a personal decision whether to believe a technical target will be respected or not. My analysis is out there in the blog. You need to take appropriate action yourself. Good luck.
Hello Ramki, Gold has moved up in a five wave structure from the low on May 5. The wave appears to have “truncated” which would be remarkable given the hype surrounding precious metals, but plausible given the thinking on commodities taking a summer vacation. As Gold is here in limbo right now, prudence suggests no position either way. However, if one was to accept the risk from here at $1502 and go short with a stop and reverse (should Gold go against me)…..what price would a logical spot to place that stop and reverse?
Hi Bob, I think a low risk sell level will be near the 50% retracement of the recent selloff, around 1524, which also marks a mini fouth wave level. Ideally you want to see if the recovery to that place happens in a 3 wave move. An early stop will be inside the wedge’s (diagonal triangle) lower boundary, or above the 62% pullback, although such a stop is not pure Elliott because the five wave sell off can be retraced 100% and still be valid.
hi sir as you mentioned if 5th wave of 5th wave has extended we will get swift sell off to 2nd wave and how much sell off do we expect if it has completed its 5 wave grand cycle or any larger degree
thank you sir for your nice prediction about gold . today gold move below 1500 doller.now how much pullback is possible in gold . around 1524 or above where we short gold . thanx in advance -harshdixit
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Ramki,
You were spot on again!!