Gold bugs around the world have been waiting patiently for this flag to end and the rally to resume… we could finally be there.
Here we see the flag in all its glory. We have it labelled as a large ABC, and then you can see Waves 1-3 of a leading diagonal to begin what we hope to be the base of 1-2 and subsequent rally. If this plays out, it could be a fabulous year for gold bugs!
Here is a bit more detail on the expectant and hopeful leading diagonal. And you can see on the left a brief outline of a perfect Extended 1st Wave.
Bullish Bias – But Running from the Bears!
While we are 100% optimistic, we are equally cautious. The market was poised very strongly to make yesterday’s C wave into a 5 wave impulse, bud didn’t. The leading diagonal explanation outlined makes perfect sense… but this market could instead be hedged to the nth degree, starting as soon as tomorrow.
Because we are in a bull market with rapid growth of the money supply, we think this is highly unlikely. However, with the dollar bouncing and unexpected hedging possible at any time – here is version 1 that doesn’t end so well…
And here is a second possibility, more likely than the one above but still not probable… if the leading diagonal turned out to be a D wave triangle, Gold could also be in trouble. And hedging there would be more likely given the clearly bullish pattern the market is painting, it seems like gold producers would at least be patient enough for $1840 again before hedging.
Fingers crossed the market doesn’t get hammered – but if it does, perhaps you heard it here first 😀 … happy trading!