Gold has had several failed breakouts over the last few years but is poised at another breakout level. Will the long anticipated gold breakout happen, asks Avi Gilburt
The last three years have been extremely difficult for metals enthusiasts. If you speak with them, you would assume that gold has been going down for the last three years. Well, at least that is the impression you would get based upon their “sentiment.”
But, in fact, all gold has been doing for the last three years is move sideways. In other words, it has been consolidating. Yet, during that consolidation, sentiment among investors has soured to where it is akin to a bear market.
Moreover, over the last three years, we have had three different breakout set ups in the complex. Yet, each time, the market has failed to capitalize on those set ups. And currently, gold has another breakout set up developing. Will it follow through on this one? No one knows for sure, but traders are a little apprehensive after the recent failed breakouts.
My job as an analyst is to highlight opportunities within the markets. We base our analysis on probabilities, and for this reason, I am unable to tell you that something will certainly happen. Unfortunately, too many market participants view the market as black and white, whereas financial markets are non-linear environments wherein certainty is an impossibility.
In my last gold-related update, I outlined that if the SPDR Gold Trust ETF (GLD) can provide us with a 5th wave higher, it would be a strong indication that the tide is turning in sentiment. And we got that 5thwave. At this point, as long as the GLD holds above $122, and then rallies beyond $127.25, that could open the door to a major rally in GLD that points us to at least the $138 region, but more preferably, up to at least the $145 region (see chart).
$122, and then rallies beyond $127.25, that could open the door to a major rally in GLD that points us to at least the $138 region, but more preferably, up to at least the $145 region (see chart).
As the market rallies, we will continue to move up our supports for our stops. Remember, risk management should be a very important part of portfolio management. Otherwise, you are relying on the most destructive four letter word in the investment world: Hope.
Avi Gilburt is a widely followed Elliott Wave analyst and founder of ElliottWaveTrader.net, a live trading room featuring his analysis on the S&P 500, precious metals, oil & USD, plus a team of analysts covering a range of other markets. He recently founded FATRADER.com, a live forum featuring some of the top fundamental analysts online today to showcase research and elevate discussion for traders & investors interested in fundamental rather than technical analysis.
