{"id":196091,"date":"2024-07-18T08:34:48","date_gmt":"2024-07-18T12:34:48","guid":{"rendered":"https:\/\/ibkrcampus.eu\/uncategorized\/chart-advisor-gold-top-potential-price-objectives\/"},"modified":"2024-07-19T09:53:33","modified_gmt":"2024-07-19T09:53:33","slug":"chart-advisor-gold-top-potential-price-objectives","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.eu\/campus\/traders-insight\/securities\/macro\/chart-advisor-gold-top-potential-price-objectives\/","title":{"rendered":"Chart Advisor: Gold Top? Potential Price Objectives"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">By&nbsp;<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=c5e39fb9b24741239e69b29c68455916&amp;_e=wDilDbJrepBD0jfEkV4kzuqpytKG7XqLupWTDMHPNnbUBsi3t3BlaSsst8AEEDtzW8gy8lBsNeJYSCmxWNixBWnKXOVwz3zFAMLwubzSg0qaA89gZvsX8xjLMgYzc9Qol6h7U4qpToRkZUN3b5GXLD9S4LDjsGGDMJLQOLKUsC5RtIZuICnTteAxo990Bare5aSaopn7P-IQe-hzYPBrmO6JHunwByK0MLQd89qr1H8kX2oR0k7__mztSQDQJQV-RDYb3sT4vXHAnTfrlkgASYROA3LHQ9GjV6dPfx3FWxQ0wAzDAEDOSwScmdAv6gGSgE6cRutz8Jd8QL1rFvxpoRdJ4ScjIX3MMWvlpf7ZH9wYVFDuu84bG_SwZQXtAp-b1LPKObuNLRW5TXIUbttF8nwM-GaV5vDjV-oeNqAlR__S6rATnfkKQPqJRQvIlcnBXkHo5RXXqPYAFWtt3H4-o1aRO3bxxGNldp-l2S6v4Pg%3D\">Stewart Taylor, CMT<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Gold Top? Potential Price Objectives<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Investopedia is partnering with CMT Association on this newsletter. &nbsp;The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice. The guest authors, which may sell research to investors, and may trade or hold positions in securities mentioned herein do not represent the views of CMT Association or Investopedia. Please consult a financial advisor for investment recommendations and services.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Gold Top? Potential Price Objectives<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Conclusion:<\/strong>&nbsp;In early 2024 gold reached the price objective derived from the breakout of the large triangle that had evolved beginning in early 2022. Upon reaching the area of the objective, a classic buying climax halted the trend. The subsequent trading range has been characterized by distribution. In the event of a breakout lower, the amount of distribution (cause) derived from the point and figure count suggests a downside objective of 10-12% lower is reasonable.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In this piece we make a technical assessment of the daily and weekly charts, provide evidence suggesting that the range is likely distribution (Wyckoff), and show how to assess potential price objectives using point and figure charts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Gold Weekly:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img decoding=\"async\" width=\"808\" height=\"474\" data-src=\"https:\/\/ibkrcampusdev.wpengine.com\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-1.png\" alt=\"\" class=\"wp-image-196095 lazyload\" style=\"--smush-placeholder-width: 808px; aspect-ratio: 808\/474;width:905px;height:auto\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-1.png 808w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-1-700x411.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-1-300x176.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-1-768x451.png 768w\" data-sizes=\"(max-width: 808px) 100vw, 808px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Past performance is not indicative of future results<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In November 2023 gold broke above lateral resistance that had developed along the 2079-2085 area.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The lateral resistance and the rising support generated by the trendline (A) defined a large triangle.<\/li>\n\n\n\n<li>In anticipation of a breakout it seemed appropriate to determine upside price objectives.<\/li>\n\n\n\n<li>I prefer to use multiple techniques to generate objectives.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">I particularly like Fibonacci extensions and retracements, point and figure chart projections and price channels.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>I look for confluences of multiple techniques and combine them with traditional chart support and resistance to generate objectives. Objectives are useful in three ways.<\/li>\n\n\n\n<li>To ensure that reward exceeds risk to the stop by at least 3 to 1.<\/li>\n\n\n\n<li>To monitor for trend ending action around those objectives.<\/li>\n\n\n\n<li>To adjust existing trades as those objectives are reached.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Importantly the original breakout from the 2079- 2085 triangle generated a price objective of 2540.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>That objective is derived: 2079 (initial point of the triangle ) \u2013 1618 (bottom of the pattern) = 461 points.<\/li>\n\n\n\n<li>461 points added to the triangle top (2079 + 461) = 2540 objective.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">In my view, triangle price objectives are&nbsp;<strong>AREAS<\/strong>&nbsp;to monitor for resistance rather than discrete points.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Additional objectives can be derived by using Fibonacci Objectives derived from the 1618 \u2013 2085 \u2013 1824 price sequence.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>1.382% = 2461 &amp; 1.618% = 2570.<\/li>\n\n\n\n<li>Soon after the breakout from the triangle a CONFLUENCE of objectives could be calculated. 2461, 2540, &amp; 2570.<\/li>\n\n\n\n<li>Potential objectives can also be derived by channelizing the price behaviors.\n<ul class=\"wp-block-list\">\n<li><strong>I prefer overbought and oversold as defined by price channels than ones defined by momentum<\/strong>&nbsp;(i.e. stochastics, RSI or MACD).<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;In March the market broke out of the triangle and over the next several weeks marked up to 245.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The combination of overbought in the channels, and the 1.382% Fibonacci objective (a bit short of the 1.618% objective), and in the area of the triangle objective, clearly defined an area of the chart where supply was likely to develop.<\/li>\n\n\n\n<li>As price approached the objective confluence, it had already exceeded the two main channel tops at A1 (derived from trend line A) and B1 (derived from trend line B), and overbought conditions had developed in momentum measures like RSI and stochastics.<\/li>\n\n\n\n<li>When I see resistance confluences of this nature, I begin to monitor for trend ending action (for instance a buying climax and secondary test pattern).<br>Despite the backdrop of very bullish news and strongly bullish sentiment, a classic buying climax developed (BC).\n<ul class=\"wp-block-list\">\n<li>Note the much higher than normal volume that occurred on a wide range bar that set a significant new high but closed near the low of the bar.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Buying climaxes typically resolve into trading ranges.\n<ul class=\"wp-block-list\">\n<li>&nbsp;Trading ranges can be distribution (marking a long term top) or re-accumulation (a pause before continuing higher).<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Over the next three weeks the market pulled back to 2285, then rallied in a secondary test (ST).\n<ul class=\"wp-block-list\">\n<li>&nbsp;The secondary test was completed by a wide price spread bar that closed near its low.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>This is the juncture at which I become particularly interested in the pattern of price and volume and the potential downside objectives.\n<ul class=\"wp-block-list\">\n<li>&nbsp;The price \u2013 volume relationships should point toward either distribution or re-accumulation.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Generally speaking, there are only two outcomes to the range, either the buying climax is short term and the market will, after a period of re-accumulation, move higher or the buying climax will offer a significant top leading to a significant markdown once supply is completely distributed to weak hands.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is the point where I shift attention to the daily perspective chart in order to closely monitor price spread and volume relationships.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Gold Daily:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"881\" height=\"506\" data-src=\"https:\/\/ibkrcampusdev.wpengine.com\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-2.png\" alt=\"\" class=\"wp-image-196094 lazyload\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-2.png 881w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-2-700x402.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-2-300x172.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-2-768x441.png 768w\" data-sizes=\"(max-width: 881px) 100vw, 881px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 881px; aspect-ratio: 881\/506;\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Past performance is not indicative of future results<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Without going into a detailed Wyckoff price\/volume analysis I will make the case that it is likely that the range is one of distribution. Note the appearance of supply (inside the oval) just prior to the buying climax at 2449, the lower volume and angle of attack on the rally to 2454 (secondary test), and the expansion of volume and close near the low of the price spread (last arrow). Rallies inside the range are being aggressively sold as strong hands distribute to weak hands. Additionally, much of the price action has developed below the midpoint of the range.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With the assessment of distribution I begin planning for a bearish breakout. The first part of the plan is to arrive at some estimation of how much downside potential exists.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>One of Wyckoff\u2019s main principles is \u201cThe Law of Cause and Effect.\u201d\n<ul class=\"wp-block-list\">\n<li>Cause refers to the amount of accumulation or distribution that occurs inside a range.<\/li>\n\n\n\n<li>Effect is the extent of the move out of that range.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The amount of accumulation or distribution that occurs inside a range determines how far the breakout of the range will move.\n<ul class=\"wp-block-list\">\n<li>In other words, the length of time spent in the consolidation is related directly to the distance of the subsequent move.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Point and figure charts are used to determine the extent of the cause and to generate initial price objectives out of the range.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Gold Point and Figure 10-point boxes X 3 box reversal:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"811\" height=\"559\" data-src=\"https:\/\/ibkrcampusdev.wpengine.com\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-3.png\" alt=\"\" class=\"wp-image-196093 lazyload\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-3.png 811w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-3-700x482.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-3-300x207.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/07\/18.07-3-768x529.png 768w\" data-sizes=\"(max-width: 811px) 100vw, 811px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 811px; aspect-ratio: 811\/559;\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Past performance is not indicative of future results<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Trading ranges represent areas of the chart where large numbers of shares change hands, often moving from strong hands to weak hands. This is why there is a consistent relationship between the length of a trading range and the size of the subsequent move. This is particularly true in very liquid, heavily traded markets.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There is no end to the debate as to which points should be used to define counts. I like to keep it simple. I look for the walls of the range, count across the two walls, and then project from the low. Others would use the smaller count derived from the two walls between the buying climax and the secondary test. After all, I mostly use the objectives to help define risk vs reward and to help draw my attention to the chart as the area of the objectives is reached.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Assuming the current range DOES NOT EXTEND and I am correct in my assessment of distribution, the count projects enough cause to suggest downside of 2010 \u2013 2030.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Note this is not a trading recommendation. Entry will be determined by price action and trade implementation techniques that I hope to present in future pieces.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8212;-<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Originally posted 18th July 2024<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this piece we make a technical assessment of the daily and weekly charts, provide evidence suggesting that the range is likely distribution (Wyckoff), and show how to assess potential price objectives using point and figure charts.<\/p>\n","protected":false},"author":186,"featured_media":196092,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[144,146,147,8,12,22,148,7],"tags":[222,1163],"contributors-categories":[503],"class_list":["post-196091","post","type-post","status-publish","format-standard","has-post-thumbnail","category-commodities","category-macro","category-north-america","category-region","category-securities","category-technical-analysis","category-text-articles","category-traders-insight","tag-gold","tag-macd","contributors-categories-investopedia"],"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v28.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Chart Advisor: Gold Top? 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