Long Term Elliott Wave + RSI Strategy on Gold
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This idea is based on the theory that the RSI Oscillator does not run (perfectly) between 0 and 100 (see Constance Brown for further reference). Specifically, the theory explains that in a bullish market, RSI tends to fluctuate between 40 and 90, with the 40/50 zones acting as support. In a bearish market, RSI ranges between 10 and 60 with the 50/60 zone acting as resistance.
I believe that Gold exited a critical consolidation phase at the beginning of December, starting a long term bullish trend. At the same time, RSI exited a consolidation phase breaking the 45.93 barrier (in the graph, the "RSI Resistance - Consolidation Phase"). On 8 January, Gold touched $1600 peak. Note that this day the RSI moved to 86.12 at the limits of the Bollinger Bands traced on the indicator. After the retracement (current price is $1555), RSI turned back to 20 periods SMA (purple line on indicator). I still expect a possible retracement under the 20 Period SMA to complete Elliott wave 2 (to $1530), with the price bouncing off to complete wave 3 until the price of $1650 (mid-February).
In case of reliable bearish power on Gold, consider the 40 support on the RSI as essential to maintain the bullish trend.
What to do right now?
Well, I am (usually) a trend follower, so this is the case for me to buy some Gold and avoid bearish temptations. I would wait for 5 DEMA to up-cross 20 DEMA and to be, in that way, an early adopter of wave 3.
Disclosure: My ideas contain statements and projections based on assumptions on capital markets, and therefore inherently subject to numerous risks and uncertainties.
Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.
I am not a financial advisor.
This idea is based on the theory that the RSI Oscillator does not run (perfectly) between 0 and 100 (see Constance Brown for further reference). Specifically, the theory explains that in a bullish market, RSI tends to fluctuate between 40 and 90, with the 40/50 zones acting as support. In a bearish market, RSI ranges between 10 and 60 with the 50/60 zone acting as resistance.
I believe that Gold exited a critical consolidation phase at the beginning of December, starting a long term bullish trend. At the same time, RSI exited a consolidation phase breaking the 45.93 barrier (in the graph, the "RSI Resistance - Consolidation Phase"). On 8 January, Gold touched $1600 peak. Note that this day the RSI moved to 86.12 at the limits of the Bollinger Bands traced on the indicator. After the retracement (current price is $1555), RSI turned back to 20 periods SMA (purple line on indicator). I still expect a possible retracement under the 20 Period SMA to complete Elliott wave 2 (to $1530), with the price bouncing off to complete wave 3 until the price of $1650 (mid-February).
In case of reliable bearish power on Gold, consider the 40 support on the RSI as essential to maintain the bullish trend.
What to do right now?
Well, I am (usually) a trend follower, so this is the case for me to buy some Gold and avoid bearish temptations. I would wait for 5 DEMA to up-cross 20 DEMA and to be, in that way, an early adopter of wave 3.
Disclosure: My ideas contain statements and projections based on assumptions on capital markets, and therefore inherently subject to numerous risks and uncertainties.
Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.
I am not a financial advisor.
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