GEOMETRY OF GOLD: MONTHLY
Today I decided to dig a little deeper and in parallel with gold futures also assessed long-term candles for Silver, GDX, and GOLD. Everything points to a much longer decline, however, there is a possibility of a short-lived relief in the next 2-4 weeks. Let me explain why.
Gold closed its monthly candle below 1788.30 and confirmed Tower Top, one of the strongest bearish reversal combos. A week ago, the monthly PSAR flipped to the dark side and the price ended below 8 EMA.
The previous week completed the second Falling 3 Methods in a row. Based on current Monthly and Weekly, I see nothing bullish in December.
Today’s daily closure was a beauty. The candle closed few pips below yesterday’s close. Technically, it is enough to consider bearish continuation. However, today’s candle had a fairly long bottom wick and it might imply that we should anticipate some bullishness (albeit could be very short-lived).
As you can see on the chart, GDX and GOLD have completed Three Black Crows that are considered very bearish continuation combos. However, it does not mean that the price would immediately fall lower. Silver futures seems to be working on a Gapping Play, giving the price a rest for another month. From the whole complex perspective, there is a possibility of sideways move for the whole December, followed by a continued decline in January.
Musings About Waves
From the waves perspective, I view the blue count as my main operative. As you can see on the Short Term chart, I think that GC should be completing wave 3 and then would take about two weeks to complete wave 4.
I also outlined Red as my alternative count on the Long Term chart. As wave B in the Blue is shorter than wave A, I am very open for this possible path. As the Red count expects a motive wave C of (B), we should be able to recognize it very quickly.
I want to repeat my hypothesis from Weekly: if this whole correction is meant to end in December, it should end before December 23 in order to comply with one more rule/guidance by Frost&Prechter. If it takes longer, the whole wave that started in August could just be wave (A) of a bigger, more complex correction.