Gold - Possible Market Cycle

[topchess]

Hello,

Gold had recently pushed lower towards 639 USD. It came to my attention that it's moving in an uptrending channel which started at 560 USD.

By viewing the daily chart, it seems that Gold completed wave 3 by hitting 688 which is also channel resistance.

Gold is currently in wave 4 and I expect this wave to stall ahead of 630 USD (channel support) then expect an eventual run to build wave 5.

It seems that Gold ultimate target is well over 700 for the near term which confirms that wave 5 should be completed before we fall in an A-B-C correction.

Chart attached.

Thank you.

[rhodytrader]

For those who aren't sure what topchess is referring to when he says "wave" or "A-B-C" correction, he is employing Elliott Wave analysis.

[ForexNinja]

Here's a good explanation of ABC's:

http://www.babypips.com/school/abc_correction.html

[akademikjeanius]

topchess. I want to talk to you about spot trading gold. I need more info. I see the potential it has.

[droesparky]

I know nothig about eliot wave. But I would like to know, how do you know where to start counting wave cycles from?

If you look at a ABC corrlection its also a head and shoulders formation.

I keep hearing 8k a ounce for gold, I think that might be a long ways off.

One more question, Does the USD and Gold have a inverse relationship?

thanks

[ForexNinja]

Originally Posted by droesparky

Does the USD and Gold have a inverse relationship?

The best answer is "Usually, but it all depends."

In a perfect world, they would have an inverse relationship because you can substitute one for the other when investing.

When the US economy is strong like bull, people buy US dollar denomiated assets such real estate, stocks, bonds, (Justin Timberlake) CDs, etc. These purchases all increase demand for the USD, therefore increasing the price for USD. Even though the US dolla makes peeps holla, its still fiat money. This is just a big word for saying the US dollar is backed by nothing but the confidence of the country.

So when the US economy starts to suck, peeps start trippin' and dump their US dollar denominated assets into something tangible and stable like gold.

Now there are times when the market starts acting freaky and both instruments move in the same direction. So one can't say they are always inversely correlated.