See my earlier chart from Mid November 2012 http://www.screencast.com/t/BYY2pjNxv
Main Reasons for this is (1) we have a triangle at the base of the rally. Triangle normally only appear in Wave 4 or Wave C. as this is at the base it can only be Wave b. Both suggest that on the breakout it would be the last move in that direction. Therefore in this case the breakout to the upside could only be minor wave c that recently topped and we have been declining since. That continuation of weakness could retest the summer low in the region of 1500 round number. (2) in a large correction such as this one, we should have Momentum divergence between what might be Wave A and Wave C We do not have such divergence in the hence we expect another lower low which could potentially produce such divergence. Consequently the current weakness could fulfill that requirement. If so, then we would have a new low in this congestion since all time high & it would complete Wave 4 on larger degree, setting the base from which new uptrend (Wave 5) could take place.
Therefore, any reasonable retracement on smaller time frame should be opportunity to short Gold .
Hi, Thanks for asking for the update on Gold chart. Today's relative sharp move (whilst not dismissing it) could still be an abc correction which upon completion is likely to continue downwards as described when chart was published. I have as yet no reason to feel that the major bottom is in from where Gold could rally to retest the historic high. Just glancing at previous section of this bear phase one could note several occasions where price looked as though it is in new Bull run but so far has not succeeded. I think it is normal for these sorts of movement but do not change overall picture. Also, recently Dollar Index has been in tight triangle and whilst EUR, Oil & Equities made upside progress, Gold failed to take advantage. So, I ask is this indicating something is wrong with Gold. I am no authority on this but we have often heard that Gold is a hedge against inflation. If this is the case then lack of Gold showing positive price action could be indicating that the future inflation expectation is not what most of us appear to think. Also seasonality suggest that important bottoms for Gold has been in late July - Early Sept time window. So until more price data is available suggesting otherwise, I am still holding to my view originally published. Hope this helps
It's a long lag that no one takes into account usually lasting 12-18 months from monetary easing US/GB/ECB/BOJ/China ... list goes on. As far as gold, we have only priced in QE1 and all those other central bankers that decided to go along with the cranking up the printing press around that period.
As far as chart.. for now the target 1500-1550 is a bit deep for me to believe. Also time frame, a bit far dated. We are almost 18 months removed from the Gold peak Aug/Sep 2011. Average consolidation period for metals is 17 to 21 months. Silver is 21 months from it's peak April/May 2011.