Gold continues to rally but is still well beneath my new stop loss area of $950. My confidence in the prior posted wave count is very low so I restructured it a little bit. My confidence in this new count is higher, but I am focusing more on basic trend analysis and the fact that gold has broken down from the ascending daily trendline and has broken it's streak of higher highs and higher lows. As long as gold remains in a downtrend status, I am short the metal.
I still feel the metal is bearish as long as it stays beneath the last swing high of $970. But a break of $950 will almost assure us that a new short term uptrend is taking place and so $970 will soon be taken out anyway. So my stop loss remains $950 knowing that I took profits on part of my short position to compensate for extending my stop loss earlier.
In the short term, it appears a series of wave 1s and 2s are unfolding. Of course, with EWP, when your wave count has a series of 1s and 2s unfolding, it lessens the reliability of the wave count. But until the wave count is officially negated, it will stand as is and I'll trade accordingly. Right now we're in a wave (ii) rally which would explain the sharpness of the recent rally. But once this wave (ii) tops and reverses, a wave (iii) of 3 of (3) will unfold which should result in a massive selloff in the metal. As long as it trades beneath $950 then this outlook remains solid in my view.
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