Last week gold nicely bounced off and advanced for three days to the extent that longer term candles started to show some signs of reversal. However, Friday’s closure was somewhat alarming and it reset everything into neutral, looking for a confirmation the next week. Let me explain the details.

The Tower Top was completed by the November’s candle, hinting about lower prices. However, the stock managed to pull the price high enough that it could complete an Engulfing or some other reversal candle. The month is still young and anything could happen.
There were two “Falling Three Methods” in a row. This week completed a solid Bullish Harami. If confirmed next week, the bullish trend could be confirmed.
From previous week update: “– if the following weeks just touch a lower low, but close above 1770.65, there would be a chance of reversal”. The next week is crucial for confirming the reversal.
Lots of drama in the past week. Tuesday started great, but the advance was a bit too fast and it resulted in the Advance Block combo over three days. Friday ended with a Spinning Top that is rather concerning.

At the beginning of next week I am expecting a pullback. The character of the pullback will tell whether it is a short-lived one or a continuation of the bearish trend. If there is any large red candle that closes below 200 MA, there is a high chance for the bearish trend to resume. Current odds – moderately bearish short term and neutral mid- and long-term. The beginning of the next week would be crucial.

Musings about Waves
In my Special Issue on Thursday I updated my readers on the changes in counts. No changes since. I treat both blue and red possible paths equally until I get a confirmation in the next several days.

From the previous weekly update:
“If wave 5 evolves as an ending diagonal, it would increase the odds of reversal just before the end of the year.
I think that 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. We will return to this on December 23rd.”

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