Gold was going down ever since it touched $1375. It made an attempt to reach those highs again in July, but did not succeed. Instead, the bears took control again, causing a plunge to as low as $1302.40 last week, breaching the previous low at $1310.70. Such a breakout has probably triggered a lot of selling orders, but as Elliott Wave analysts, we had another thing in mind. The following forecast was first sent to our clients on August 22nd, when gold was trading around $1341. (some of the marks have been removed for this article)
This chart represented one of the alternative counts we advised our clients to have in mind. A week later, on August 29th, the above-shown count became our primary one. “We might see a decline towards $1300-$1295 before the uptrend finally resumes” was the most likely scenario, we thought, while gold was hovering around $1321 at the time. All we had to do, in order to come to this conclusion, was to read the chart correctly and spot that green rising trend line, which was likely going to discourage the bears from going further to the south. Today, September 8th, the yellow metal fluctuates close to $1348 after forming a bottom at $1302. The updated chart below visualizes gold’s behavior during the last three weeks.
Some might call gold’s decline and following rally a “fake breakout”. We call it a nice bounce, because the Wave Principle allowed us to prepare for it, since it was the most probable and natural development. Gold demonstrated how, by analyzing a chart from an Elliott Wave point of view, traders could predict two consecutive moves, as well as the reversal between them with a great deal of accuracy. And that's just one of many benefits wave analysis adds to your trading arsenal.