October 27th, 2012
by @tradepoly, Zentrader
Again this weekend yet another “following the script” report with regards to the Gold Cycle; it really has tracked our expectations well. Thursday gold touched $1,698 and with that we witnessed a 14 day $100 decline. It helps with keeping expectations in line when you already expect a decline of this magnitude.
Full graph displayed after Read more.
With today’s drop, we came very close to the 38.2% fib level of this entire IC, a point that I would normally consider the minimum expected retracement level for a final ICL. Technically we’re now seeing oversold levels which have qualified as ICL events in the past. Although Gold is still far from “extremely oversold” and it’s extremes that normally define ICL events. From a Cycles standpoint, we enter Day 21, now within the timing band for a Cycle Low and right on the average (in days) for 4th or 5th Daily Cycle’s.
As an update to the weekend report, I have provided you (below) with the past 4th and 5th final Daily Cycles, shown by percent decline over Cycle days. As you can see, we now have a Cycle that conforms perfectly to past final Daily Cycle that is also a part of similar dominant (C-Wave) Cycle. The key point is that in both duration and decline, this Cycle is now right on the average of this sample set.
The all-important sentiment towards Gold is also sharply contracting. Typically sentiment drops the most in the final weeks of an ICL move, and these sentiment readings do not take the past 2 days of declines into consideration. You will also notice that I highlighted past C-Wave sentiment decline levels on the chart below. It’s important to understand that sentiment within C-Waves do not decline to the levels as seen during both the recent D and B Wave lows.
The Weekly Cycle has hugged the trend-line I drew 3 weeks ago and now we’re seeing the expected 3 Weekly declining candles. The foundations for an ICL are now just about in place. Just like the Daily Cycle, the Investor Cycle has essentially now flashed the “all clear” ICL sign. This simply means that although we’re not at extreme ICL levels, we have for the most part fulfilled a very wide range of conditions which are present during all other ICL’s. Any speculation on further price declines from this point forward are simply just a matter of opinion, the evidence comfortably supports a Cycle Low between this point or up to 5 days out and $60 lower. The point is from a Cycles standpoint, we have entered the “sweat spot”, further declines are possible, but very far from assured. So as to my personal opinion, I think we have one more 1-3 day drop with gold, most of it being intra-day action that touches as low as the $1,665 level.
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