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.
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.
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).
The smaller moves are meant to help traders pin point new entries.