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 August
25, 2004 Commentary (mid-week edition)-
Today I am
going to follow up on the potential gold setup. Before we start, I want to
mention that the '100th anniversary commentary surprise' is coming along well,
and I hope to have it posted and available perhaps two weeks from this
weekend. I will continue to hold off discussing the details until then, but I
can say it is going to be a lot more awesome than I had at first expected. Once
I am done with this 'surprise' I promise to wrap up Trade Management.
Then I'm going on a writing break, taking a long and much needed rest from that
for a while. Just in time for the fall trading season to get up to
speed.
Gold took a steep plunge, and then rebounded today. I can't say if
it will even make it to my potential trade areas, or if it does, if I'll like
the behavior and get a decent entry trigger. All I can do is watch and wait. I
follow many potential setups, and only a fairly small percentage actually fully
set up. That's the nature of the process. The earlier in the process I start to
watch, the less likely it is the entire process will unfold as hoped.
With today's
rebound gold has set up a possible wave 5 move into the grouping(s). It would
be a bit extended for a wave 5 if it went to the higher .886 grouping, but it
wouldn't violate any of the Elliot rules. Some may see this as a wave 5 of 3.
Regardless of all that, that's just an observation, and isn't critical to the
setup. I just like to notice obvious wave counts if they jump out at me. I
mostly stick to the Fibonacci numbers and the obvious impulsive or corrective
look of the moves.
Let's see what gold looks like after today's
action.
Gold still looks like it is in an uptrend
into the potential trade areas. Although the plunge was harsh, the reversal
today puts gold right back on track. Given the possible time factors, though,
gold could move around a lot in here and still complete the setup. It's a real
watch and wait setup.
Let's move in closer on the chart.
This view shows just how easily gold could
make a run at those groupings from here. That had me wondering where the
external retracements off this pullback would fall. I wanted to see how much
'harmonicity' gold might be
showing as it gets close. I'll add a 1.618 external retracement onto the chart
first.
The arrow shows where the 1.618 external
retracement landed. It was dead center in the grouping. To me, that's a good
sign. Let's add in another external retracement, to see if that lands in the
upper grouping. I'll try a 2.058.
The second arrow shows where the 2.058
external retracement landed. Gold is displaying a very high degree of 'harmonicity' right now. I have two
tight groupings, and the current price action is very much in line with those
groupings. None of this guarantees anything specific is going to happen. On the
other hand, though, as I follow along, if things continue like this, I will be
looking for an entry trigger to take a potential trade. What you are seeing
here is a part of the process that I follow as potential setups unfold.
The next
commentary will be the weekend edition, posted by Sunday.
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