On a pure technical basis, we have already demonstrated yesterday how #ES / SPX was setting up for a fall, and falling it did, indeed - That was based on a 5-prime positioning, the most commonly level of aggressive counter-trend event.
Here, the XAU is giving us a mirrored situation, except that the technicals are coming into alignment to see price soar. This is not a comment on whether gold is over or under-valued, simply that the chart is preparing to squeeze a few shorts out - A similar situation occurred with the Nikkei when it soared out of the same geometric construtiob - See link here: tradingview.com/v/1l026BJo/ .
WOLFE WAVE PATTERN & DISCREET GEOMETRIES:
I will assume that you are familiar with the pattern. I have dedicated a lot of time over the past weeks discussing this pattern, and it is now giving us a live application, once again after its terrific performance yesterday on the e-Mini S&P500.
Here, price has been pushed to the taut side of the triangle, at a level that would usually require an alignment along Point-3 to Point-5' using the parallel from the 2-4 Line. While the angle of the 2-4 Line is preserved to support the last three lows after price broke below its 1-3-5 Line, the alignment remains amiss at this point, and there is no clear way to bring it into alignment except forcing a deep, sudden decline to carve out a lower low at 5'.
(for those who have read the instructions and my added observations on the Wolfe Waves pattern, do you now see the "Tunneling"?)
HOW LOW CAN IT GO?
Turns out that the predictive/forecasting model has defined a narrow range towards which further decline is expected. That range is defined as:
1 - TG-1a = 1255.73
and
2 - TG-1b = 1255.16
OVERALL:
A misalignment is calling any imminent rally into question. Compounded with the predictive/forecasting model, added downward force will probably push the pedal to this metal to find its true floor.
Cheers,
David Alcindor Predictive Analysis & Forecasting Denver, Colorado - USA
As indicated before, Gold will likely attempt a rally. However, before seeing new light, it has to drill through the WW pattern. And then, there is one problem: The wave count remains incomplete. So, is this setting up for a fake rally first before reaching loftier levels ... It certainly appears possible.
First things first, and as indicated yesterday over a discussion of a rally, XAU will likely struggle to get itself across the thorny edges of the Wolfe Wave pattern ("WW"), and the thick red segment I had left in the pattern is starting to confirm that next week might turn this market into a bloody muddy field, littered with dead hopefuls and stop-losses that were left hanging too low on the tree of hope.
I presume that a decline would need to occur first before we see a surprising rally, which is what WW patterns tend to do quite dramatically.
Cheers,
David Alcindor
fximperija
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Just wanted to share a wider view (daily) with 2 bullish patterns, one already triggered, the 2nd lower, waiting for trigger. The intersection of the falling wedge with a daily TL (red slashed) @1252.3 might be the point of a bigger turn. the 1268.8 is acting as res for the last 3 days of previous week. However a short jump to test the cross of falling wedge and major TL (pink spot) could happen soon.
4xForecaster
⋅
Hi @fximperija - Very nice, if it ends up moving according to patterns. I have a different interpretation of pattern purposes, but one that most pattern traders (I used to be one) do not agree to.
In the chart, from the rally following the apex reach near the 1390 level, I could anticipate many patterns, simply because patterns are permissive events that follow (not lead) internal geometries. In a way, patterns are the cloak of a geometry-based skeleton that givens them their final shape. Hence, it is the anticipation of the geometric projections that is worth studying (in my view), rather than wait for what type of animal is coming out of the final geometry.
For instance, a Bat can extend to a Crab, and a Gartley to a Butterfly, and a Cipher to an Shark, or worth, an elongated Shark which the pattern trader constantly runs after. However, the internal structural of the CD last evolving leg will most often tell you what the pattern is going to be, without having to use any fancy predictive/forecasting model.
In any case, i don't say all this to dismiss pattern trading, but in my years of trading, looking closer and closer into the CD leg of Bats to Crabs, Sharks to elongated Sharks, or Gartley to Butterfly, I realized that much of the geometry was already telling the trader interested in the internal structures what pattern would be more probable over another, as price was nearing the conclusive end of, say a Bat, but price indicated something otherwise, and would indeed project forward into a Crab.
In any case, looking into a reverse situation and plugging the data into the model, here is "Worst Case Scenario" projection for XAU. I could see this evolving from the Gold Bullish Gartley you have projected down to 1211.63 into a Crab, with Point B = 0.50 * XA, and D = 1.618 * XA, and thus following in the proximity of the model's worst case scenario fantasy - Which might probably be the next forecast, considering the possibility of China dumping Gold.
Any way, this is all in good spirit, and please do post your charts and patterns, as they are as essential to trading as any other tools. It's the various perspectives that really interest me most, and the reasons behind it, because it takes many eyes to see one some thing, and many brains such as yours to put the puzzle pieces together into one cohesive picture: Now that you are posting your patterns, I am looking back at the floor and wonder how solid is it? What is the probability of a pattern as good as A Wolfe Waves that it be wrong? And are we fooling our senses with hopeful bullish biases when the signs of a bearish avalanche would become all to obvious after we dig ourselves out of the snow.
Looking at the DAILY chart, the main trend is BEARISH, and any rallying from now would have to occur via a wave count that would justify a reversal pattern in that larger timeframe. From a structural basis, 1433 is the level to exceed in order for the DAILY traders to receive such reversal indication. This is based on the fact that price bottom first as 1180, then attempted a double-bottom falling short of it at 1178. This discreet discrepancy is big deal for Ellioticians, as it responds to the primordial rule of an impulse whose second wave should not fall below Wave-1. This rule being observed and price continuing to carve higher highs and higher lows since then indicates that a significant rally of a DAILY proportion may be underway.
This would support your bullish pattern projections (especially those patterns that would allow for a rally resumption at a higher high price relative to the DAILY price development).
However, a failure of the prior low at 1178 would suggest that the entire rally was likely a corrective FLAT pattern, whose projections would then support the "WCS" outcome, and yet print a Crab, in such case, Crab would simply submit itself to the whims of price, and would have had little to do with forecasting, as opposed to wave count and the internal structural development of price (i.e.: the "skeleton").
My point here is that as a former pattern trader, I had to dig a bit deep, remove the eye-covering veil of pattern envelops, and instead dissect deep into the skeletal structure of the underlying price development.
As with biological organisms, bone will often tell you the age of the price development, and how much further it can grow. The pattern would simply require a "change of cloth" to fit that growth, not to project it.
David
David
4xForecaster
⋅
Now, all this being said, there are some pattern traders out there doing well for themselves. One that I know personally is Akil_Stokes who makes a living off of pattern trading. He can be found here:
Akil and I know each other well :) On the obvious side of facts, Gold contracts on Comex down 20,2% (74031) last week from 92735 the preceding week. Data from CFTC show net silver long contracts cut in half, 6264 last week, 13718 the preceding week.
4xForecaster
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I read interesting news today that China might consider selling Gold.
David
fximperija
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Yes, just the idea can pull Gold down w/o actually happening.
manijeh.kazemi.33
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I agree with your analysis if prices break 1277
4xForecaster
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@Manijeh.kazemi.33 - This would be a very good structural marker, but one that would possibly be anticipated by algos, ready to siphon off all of the weak-hands, by merely pushing price back down to the red segment highlighted in the pattern.
One way this could be achieved would simply be via an incomplete 5-Wave segment based upon Elliott Wave Principle ("EWP"), as follows (note that I am not using proper degree notation, and that the illustration is merely to look into the wave count incomplete nature of the 5-Wave structure, as suggested by the BLUE enumeration):
So question is, how much of a swing is this market preparing us for? And at what level would this be occurring? ... Provided that the 5-Wave count is truly revealing a true deficiency in missing two more points.
It'll be interesting to see this unfold.
Thank you for your participation. It is greatly appreciated.
David Alcindor
4xForecaster
⋅
05 SEP 2014 - Update:
One technical way to prove the model wrong is to simply wait for price to rally across the 1-3-5 Line and close above it, a significant event some other traders were calling "Breaking Across AND Closing Across", or BACA for short. Here, you would need to witness a BACA > 1-3-5 Line for added confirmation that price is quitting its dim residence to pursue august grounds.
From Twitter:
------------------
XAUUSD - Gold is drilling through diamond-shaped WW. Yet, wave count remains incomplete:
via @TradingView | XAU
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As indicated before, Gold will likely attempt a rally. However, before seeing new light, it has to drill through the WW pattern. And then, there is one problem: The wave count remains incomplete. So, is this setting up for a fake rally first before reaching loftier levels ... It certainly appears possible.
First things first, and as indicated yesterday over a discussion of a rally, XAU will likely struggle to get itself across the thorny edges of the Wolfe Wave pattern ("WW"), and the thick red segment I had left in the pattern is starting to confirm that next week might turn this market into a bloody muddy field, littered with dead hopefuls and stop-losses that were left hanging too low on the tree of hope.
I presume that a decline would need to occur first before we see a surprising rally, which is what WW patterns tend to do quite dramatically.
Cheers,
David Alcindor