According to fundamental analysis of financial markets, external news events -- such as newly released economic data or newly formed weather patterns -- create market trends.
In reality, however, the sequence of events is often WAY out of order. First, a market's price makes a significant move in one direction. And only then do the experts ADJUST the news to FIT said move AFTER the fact.
Case in point: In the early 8am-to-9am hour on November 9, gold prices enjoyed a strong uptrend. During that time, the following "bullish" news items were said to be responsible:
- "Gold Surges On Eurozone Woes" (The Guardian)
- and --- "Gold Bullion Benefiting From Safe Haven Flights As European Debt Crisis Intensified" (AP)
Then, around 9am to 10 am, gold prices turned down in a precipitous $20-plus per ounce decline. "Fundamental" analysts didn't miss a beat. With just a few minor tweaks in the wording, their formerly "bullish" gold stories were now "bearish." See:
- "Gold Prices Slip On Worsening Eurozone Debt Crisis." (International Business Times)
So, is gold going up or down because of Italy's implosion? Based on the above logic, I wouldn't know what to think, either.
In comparison, the advantages of Elliott wave analysis are obvious:
- Elliott waves anticipate a market's next big move before it happens -- instead of "explaining" it to you afterwards.
- Elliott offers you OBJECTIVE forecasts based on clearly defined wave structures -- not the confusing news interpretations
- Each one of the 13 Elliott wave patterns adheres to specific rules that show you the direction of the trend and specific price targets.
- Elliott also tells you how long the trend should last, when the trend may end, and most importantly, at what price point the forecast becomes invalidated.
With that in mind, we now turn to EWI's Metals Specialty Service to see exactly how editor Mike Drakulich is utilizing his Elliott expertise to stay ahead of gold's near-, and long-term course.
On November 9, Metals Specialty Service's intraday analysis on gold unveiled a compelling price chart: It showed a double zigzag Elliott wave pattern underway since late September. (A zigzag is a simple three-wave move labeled A-B-C. When zigzags occur twice in succession, they are connected by a wave "X," producing what is called a double zigzag.)
If Metals Specialty Service's current Elliott wave forecast is correct, the double zigzag puts gold at a significant crossroad: It can either extend higher, along with prices -- or, it can call it a day and initiate a new downtrend.
But, according to Mike's analysis, two key technical indicators -- i.e. the 50-day Moving Average and long-term upper channel line -- are bolstering only ONE side of the outlook.
GOLD: Turn Market Possibilities into Actionable Probabilities with Help from an Elliott Wave Expert
Metals Specialty Service Editor Mike Drakulich uses the Wave Principle and 30 years of market experience to help you replace the endless market possibilities with higher-confidence probabilities.
Subscribe today to get Mike's expert intraday and daily Elliott wave forecasts complete with key price levels, targets and valuable insights for gold, silver and other major metals.