Gold Sentiment Shifts In the 3rd Wave - 1130 Support

FX:XAUUSD   Gold Spot / U.S. Dollar
886 10 5
2 months ago we identified Gold             as a market that “the wave picture on Gold             is simple, though the timing of the trade may prove difficult.” From a bigger picture perspective, Gold             was close to finding a meaningful bottom.

We went on to say “There is a false breakout zone from 1060-1131 which means so long as prices hold above 1060, this wave counts suggests the possibility for 1300-1450. So the deeper Gold             drives, the better the risk reward ratio trade there is.” Gold Bugs – You May Get Your Wish June 21, 2015

We have seen some interesting developments in the metal this week. In Monday’s US Opening Bell webinar, we discussed using a breakout above the Aug 12 high as a long entry trigger. The breakout took hold on Wednesday. (Catch the recording of the webinar inside DailyFX Plus – you can register for a free trial here if you don’t have an FXCM             live account http://www.dailyfx.com/forex_trading_signals?cmp=SFS-70160000000Nc3HAAS )

Secondly, and more importantly, the sentiment is shifting strongly.

On Aug 19, SSI             shifted from net buyers to net sellers. For those familiar with sentiment readings, we use SSI             as contrarian signals. With SSI             shifting while it appears we are in the midst of a wave 3 higher, this means if you are not long, consider finding areas to position long.

Based on the current wave picture, price may soften towards 1130. Below 1120 would cause us to reconsider the wave count as depicted.

Good luck – feel free to comment.
With today's low briefly penetrating 1120, I am altering the wave picture slightly. The spirit of the message is the same in that we're looking for continued strength. That strength would need to giddy-up fairly soon.

My growing concern in Gold is two-fold: 1) the move lower is digging in deep, 2) SSI is beginning to elevate...up now to +1.55...this is growing into a bearish signal.

IvanLabrie JWagnerFXTrader
I think it's a corrective structure until your 2. Or just a larger corrective entity.
Last move down looks really strong to be part of the same degree, and correcting the advance, don't you think?
Yes, as mentioned in the previous comment, my concerns are growing and that plays to your point of "last move down looks really strong to be part of the same degree".

Even the wave 2 vs wave 4 alternation is debatable. Wave 2 appears to be a clear sideways where as that little blip higher on Aug 24 gives it a sideways feel too. If there is any bullish juice left, prices would need to turn higher fairly immediately so bulls have a small opportunity perhaps to 1150.

Otherwise, this move over the past 30 days becomes a three and opens the door to leading diagonal higher (similar bullish spirit) or ending diagonal lower (perhaps to 1000).
+1 Reply
IvanLabrie JWagnerFXTrader
Excellent, ending diagonal makes sense.
I think target for gold is 1218 to 1253 in near term
Thanks Jeremy. I got long shortly after the webinar! Would you consider coming out now, and then re entering at circle 4?
Or is the timing too difficult?
JWagnerFXTrader DavidRoberts
Your entry after the webinar is likely a good one. Prices may revisit these areas a couple of times but when you look at the bigger picture...larger moves may be on the horizon. Therefore, holding and building is the higher probability position at these levels rather than fretting over the smaller moves.

The smaller moves are meant to help traders pin point new entries.
+1 Reply
DavidRoberts JWagnerFXTrader
yes, I have missed the boat numerous times before trying to be too clever!! Thanks! :)
Great analysis, Jeremy. Significant momentum divergence from the spike low.
Excellent point Jonas. 'B' waves are sucker waves and divergence is typical of them.
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