Captain, I’ve said before that my expensive top of the line charting package for some reason doesn’t give me the XAUUSD Gold chart, which is what I used to analyse. Nevertheless, I found a Gold Futures chart and a Copper Futures chart. If you can validate that the prices on these make sense, I’m happy to analyse these charts as below. Note that I’m transferring my stock analysis skills to these commodity charts for the first time, so it may be that they behave a bit differently, but they certainly look like stock charts.
Gold Futures Monthly chart.
Looking at the whole history that I have back to 1975, there is a clear Elliott Wave pattern that’s formed in the Gold Futures. EW works really well the bigger the timescale and more liquid the market. So pretty confident of calling this.
It suggests that Gold has entered a Wave 5, which is the steepest, sharpest rise of the waves to a blow-off top. EW doesn’t tell you timing, but a reasonable slope in proportion to the rest of the chart suggests about Year 2019 for a top.
Wave 5 Price level target is normally a 75% projection of Wave 3, therefore target a
2,296 gold price, although could stop short at 50% or 1,879. (These levels are plus or minus an appropriate wiggle room at this scale).
Adding the price levels from the All Time High in black numbers down the right of the chart as a check. Price retraced down towards the strong ATH 50% and reversed back up. Demonstrates strong bounce up with momentum.
Conclusion: Buy gold, we’re in a strong 2 or 3 year bull phase.
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Copper Futures Monthly chart
This one is not an easy Elliott Wave pattern to discern, but is still valid as I’ve marked it up. Less certainty than the Gold Chart due to such a volatile pattern, particularly that big drop in 2009. Nevertheless, the pattern since 1986 suggests we are in a bear phase for Copper.
A better guide is:
- A strong monthly downtrend line shown in solid Orange. These are hard to break up through.
- Levels of the All Time High. Refer number in black down the right side of the chart. Compare to the Gold Chart above, whereas gold reversed above the ATH50% level, so strong, Copper has fallen through the ATH50%, being classic bear market signal. Unless it gets back over quickly and consolidates above it on this next test, expect it to fall to the ATH25% at 1.15. That’s a reasonable natural support level anyway.
Caution: Short term it’s reversed off that 78.6% level shown. This is unusual in that position. Still bearish, but it might suggest some sort of harmonic pattern, meaning it does get a bounce up though the ATH50% and Orange line, before failing later. But I don’t think so.
Conclusion: Long term Bearish chart. Currently in a counter-trend up that might last for July/Aug (till it hits black ATH50% line) or less likely till end of 2016 if it tests the Orange line. Next month or so is important for this chart if it's going to recover. However, bear should resume shortly and fall for next 3 to 4 years.
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I'm not sure if this fits with your commentary that you linked from XSO. I'm saying gold bullish and Copper bearish. I think you're suggesting that everything is either up or down together.
I'll follow this post (after watching the golf!) with an update of my Dow Jones index analysis, which suggests that the next few weeks may complete the year long reversal pattern of this 7 year bull market from 2009. A collapse in the DJI would align with the above Gold and Copper analysis.
(20min delay)