Beyond the News: Why I Trust the Charts When Trading GoldBased on the current structure, I believe gold is in the fifth wave of a larger Elliott Wave formation. On the higher time frame, the price action appears to be contained within a channel that resembles a leading diagonal pattern—where Wave 1 is typically the longest. From this perspective, I anticipate a potential retracement to the 0.618 Fibonacci level of the most recent upward move, or a test of the lower boundary of the channel before a reversal may occur.
My trading plan involves two potential entry strategies:
Enter at the 0.618 Fib retracement with a stop-loss set near the 0.881 level.
Wait for a bounce off the lower channel, followed by a pullback and a breakout above the start of the pullback before entering the position.
While no trader can be right all the time, having a structured plan with predefined take-profit and stop-loss levels is key to effective risk management and long-term survival in the markets.
Why I Favor Technical Over Fundamental Analysis
For those wondering why I rely more on technical analysis—especially Elliott Wave Theory—over fundamental news, here’s my reasoning:
I’ve found that news and earnings-based trades often behave irrationally. A company may report strong earnings and guidance, only to see its stock sell off, fake a rally the next day, and then sell off again. Conversely, a company with poor earnings may drop ahead of the report, only to rally immediately after. These inconsistencies made it difficult to build a reliable strategy based solely on fundamental data.
Over time, I observed that despite news events, the market often completes its technical structure—such as Elliott Wave formations and Fibonacci cycles—before fully reacting to news. In these cases, fundamental developments tend to accelerate or confirm the direction already implied by the technical setup, rather than override it.
Gold is no exception. While it's common to assume that the S&P 500 (ES) and gold move in opposite directions due to risk-on/risk-off dynamics, I’ve noticed that they can trend in the same direction when their respective Elliott Wave structures align. This doesn't eliminate the inverse correlation concept entirely, but it highlights the importance of integrating technical analysis into a fundamentally driven view for more precise entries and exits.
Ultimately, I view fundamentals as the fuel, and technicals as the engine that defines the path.
