Gold Reverses

The weekly chart of gold shows how effective weekly reversals have been at signalling a reversal of the trend. This weeks reversal was not as powerful as some previous ones, but it should portend a decline that retests the April low at least.

Today marked the one year anniversary of the 2008 rally high in the Qs. We also have the following turn dates coming up 6/12, 6/19-6/22 and 6/26. I am not sure how this will play just yet, but today's high likely completed 5 waves up from the 5/26 low. It is still possible that a slight new high could be seen on Monday, but the next significant move should be down in either a 3 wave correction of the recent 5 wave move, or 5 waves down to complete a flat correction that began on 5/6.

Once we see 3 waves down, it will be time to begin looking for a valid entry point for the final move up. This could be a MACD buy signal, a move above the b wave high, a move above the previous week's high, a 3 week high, a weekly reversal bar, a daily reversal bar, a test of the Jan/Feb highs or the May lows. The key will be to let the market action let us know the best method for entry and choose something we have tested and are comfortable with. I will probably be using both the MACD and the previous week's high, weekly reversal bar, or a powerful daily reversal bar.

Overall, it will have taken 6 to 8 weeks of frustrating action from May 6 before we will have seen the next big trend move. This points to the need to curtail trading action during corrective periods to preserve capital for the next trend.