- September 25, 2011
- Posted by: Ramki Ramakrishnan
- Category: Gold
The sharp move down has all the characteristics of a move that starts after completing an extended fifth wave. Our target should be wave ii of the extended fifth, which lies at 1478. Having come down to 1626, the 23.6% retracement level of the whole five wave rally, we are likely to pause here, and certainly I think there is good support near 1575 which is a good place to think of a counter trend trade. Strong resistance comes at 1790 now.
It might be helpful for some to consider why I was reluctant to confirm a top in Gold was in place at 1920. This is explained in the post of Sep 8th. My approach to trading is to be exposed when the risk of error is low. A conservative approach would make us miss some very nice moves like what just happened. That is the price of survival! It does seem now that the move to 1920 was not 3 waves, but a five-wave affair. See the hourly chart to the right. Every now and then, we will witness situations where it is possible to count waves differently, and both scenarios appear equally appealing. When we reach such a ‘fork-in-the -road’ it is best to find a shady spot and rest while we wait for someone who knows the road to tell us which way to go.
This someone is usually an armchair analyst who doesn’t trade, but made the right call and so wishes to publicize that fact. (Someone who traded and lost money will not tell others, and an experienced trader who made money knows that his next trade could be wrong, and anyway he doesn’t care for being right. He only wants to have good trades, and so he will not tell us). But the best teacher is the market itself. If we arm ourselves with sufficient knowledge of the Elliott Wave Principle, we can make adjustments to our count, and get ready to trade the next move with low risk! That should be our goal, and it is the mission of Wave Times to help you acquire that knowledge and skill set. Good luck all.
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