GOLD (COMEX) Gold

Originally posted by MilliBuster ↑

This just means that around about the 50% level, there will be a definitive decision made by the market that will change the landscape of gold for a long time to come. This is the level to look out for. Elliot was the first trader to incorporate the fibonacci ratios to charting and while he is still relevant, fib versus Gann is an interesting issue. So heres my outlook. If the 50% level holds I will continue investing for the long term. However, if it breaks, I will definitely cease investing and begin trading. If this happens, I would only trade gold here and there. I would have to bite the bullet and diversify my portfolio and become a trader.

However, before anyone says that Gann also traded, I state that if one was to take one thing away from Gann's theories it would be enough to take away his 50% rule and that this rule allows one to invest. But for any critics out there I will clear up Gann's trading strategy around the 50% rule.

If 50% breaks then the following uptrend will not be considered strong. If it does not break then there is a high probability that the next price movement up will go 100% of the previous range, which in gold's case is $3800. I would not be so wreckless to say this will happen any time soon but if 50% holds then $3800 becomes a strong level of resistance. Gann went on to say that any drop below the 50% level indicated weakness, but even more so if the 75% level of support is tested. In short, the more price drops below 50% the more hope will be lost by the market.

My teacher has professed to me that if I were to spend my time looking at the top 150 companies and then refine that search looking for prices at the 50% level and poise myself to enter then I could make a living and Gann said that you could become a rich man. Of course, these teachings seem counter intuitive when comparing gold stocks to the price of gold. Gold has not broken the 50% level yet many gold stocks have broken that level. Thats why I write now that as an investor I am fine with this but if I was a trader than I would be more inclined to be conducting top down analysis and looking to cash in on more frothier areas.

But my prediction is gold will hit $3800 next time. I cant say how soon until the 50% level plays out.

Expand

1975-1976 gold went through 50% retracement, and went forth by a factor of 8. That will give gold the value of $8800 from today's 50% all time high retracement.