Gold Resurrects Major Base/Reversal Count | RJO Futures

February 2, 2017 8:27AM CST

Overnight's recovery above 24-Jan's 1220.1 high negates the bearish divergence in momentum discussed in 25-Jan's Technical Blog and defines 27-Jan's 1179.7 low as the end of the suspected correction within a major base/reversal count introduced in 04-Jan's Technical Blog.  If correct, further and possibly accelerated gains may be exposed straight away.

As a direct result of this resumed strength the 240-min chart below shows that the market has identified yesterday's 1199.7 low as the latest smaller-degree corrective low the market is required to sustain gains above to maintain this more immediate bullish count.  In this regard this 1199.7 level is considered our new short-term risk parameter from which shorter-term traders with tighter risk profiles may objectively rebase and manage the risk of a resumed bullish policy.  Former 1217-to-1220-area resistance is considered new near-term support.

Gold 240 min Chart


The daily chart below shows the past week's resumption of Dec-Jan's 1124.3 - 1220.1-rally that preceded it as part of AT LEAST a base/reversal of Aug-Dec'16's 1374.2 - 1124.3 decline.  The really opportunistic thing here however is that we believe this base/reversal count is a actually a subset of a massive base/reversal of the secular bear market from Sep 2011's all-time high at 1923 to Dec 2015's 1045 low!  If correct, this means a recovery in the months ahead to levels above last year's 1374 high.  And possibly without dipping below last week's 1179.7 low.

Gold Daily Chart


Gold Daily Chart

The weekly log scale chart below shows the past month's basing behavior after a not unexpected "extensive" (i.e. >61.8% ret) of Dec'15 - Jul'16's rally from 1045 to 1377.  Contributing to this base/reversal and generally bullish count is this market's return to relatively bearish sentiment levels that have warned of and accompanied such previous base/reversal environments.

From an even longer-term perspective labeled in the weekly log close-only chart below, the prospect that the entire 2011 - 2015 decline is a complete 5-wave Elliott sequence that finished with the lowest Bullish Consensus ( levels since 2001 reinforces our call for a major, multo-year correction or reversal of the entire secular bear market.  And as a result of overnight's resumption of Dec-Jan's rally, the market could well be re-exposing this MAJOR bullish count straight away.

These issues considered, a bullish policy and exposure is once again advised on a scale-down from at-the-market (1222.5) to 1217 with a failure below 1199.7 required to step aside and await a preferred risk/reward buying opportunity that may then come from sub-1175 levels.  In lieu of such sub-1199.7 weakness we anticipate further and possibly accelerated gains straight away.

Gold Weekly Chart

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