RJO FuturesCast

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While it may not look like much, this afternoon’s FOMC minutes-related spike above Mon’s 1210.9 high leaves Fri’s 1194.5 low in its wake as the END of the decline from 27-Feb’s 1264.9 high and start of a correction or reversal higher.  In this regard 1194.5 is considered our new short-term risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can now be objectively based and managed.

To be sure, this week’s recovery attempt still pales in comparison to the $70-plunge and might easily be just a mere corrective hiccup ahead of resumed losses.  But two different Fibonacci relationships cut across in the immediate area of Fri’s 1195.4 low and cannot be ignored as factors that could contribute to a broader bullish count.

Gold 240 min Chart

While steep, the recent decline from 27-Feb’s 1264.9 high in the 240-min chart above can be counted as a 3-wave affair as labeled.  It is interesting to note per this count that the decline from 06-Mar’s 1237.3 corrective high came within a buck of equaling the initial 1264.9 – 1223 decline in length (i.e. 1.000 progression).  Separately, Fri’s 1194.5 low was just a dime removed from the (1194.6) 50% retrace of Dec-Feb’s 1124.3 – 1264.9 rally on a daily chart below.  While it would be premature to CONCLUDE a broader move higher from Fri’s 1194.5 low after such minor strength, against the backdrop of a still-arguable multi-quarter base/reversal environment it would likewise be short-sided to ignore such a possibility.

Gold Daily Chart


Gold Weekly Chart

Our long-term base/reversal count is predicated on the following technical facts:

  • a confirmed bullish divergence in MONTHLY momentum that breaks the secular bear market from Sep’11’s 1920.7 all-time high
  • a textbook 5-wave Elliott sequence from the Sep’11 high to Dec’15’s 1045.4 low
  • historically bearish 2015 sentiment not seen since Apr 2001.

This is a unique combination of factors typical of major base/reversal environments.  2016’s rally to a 1377.5 high is considered the initial A- or 1st-Wave of a major correction or reversal higher.  As a result of the extent of Dec’16 – Feb’17’s rally we believe that 15Dec16’s 1124.3 low completed the B- or 2nd-Wave correction within the multi-quarter base/reversal PROCESS that now leaves the market poised for a (C- or 3rd-Wave) resumption of 2016’s rally to eventual new highs above 1377.  Today’s 1211+ recovery may have defined Fri’s 1194.5 low as the end or lower boundary of a correction within this resumed and larger-degree uptrend.  A failure below 1194.5 is required to negate this specific call.  These issues considered, traders are advised to move to a cautious bullish policy from 1207.5 OB with a failure below 1194.5 required to negate this call.

Gold Monthly Chart


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