Tuesday, October 30, 2012

Gold’s Final Leg down Is in Progress

Toby Connor
Connor has previously warned traders that markets, especially gold, were at risk of a profit-taking event, because the dollar had found an intermediate bottom and begun a countertrend rally.
He thinks the second stage of that rally is beginning, and expects the dollar index to test the downward-sloping 200-day moving average before rolling over and continuing the secular trend. This should drive gold down into a final intermediate degree bottom.
As of October 18, gold was on day 15 of its daily cycle, and that cycle normally lasts 18 to 28 days. Thus, we should get a final bottom sometime between October 22 and October 31.
In trying to time the exact bottom, you could either buy when gold tags $1,694 (the 38% Fibonacci retracement level), or when the dollar index tags the 200-day moving average. Either of those events should be close enough to the bottom such that any further drawdown isn't going to be very significant, or last more than two or three days.
Connor expects the next intermediate cycle to be just as violent as the last one, and gold should make its first test of the all-time highs at or slightly above $1,900 sometime before the end of the year.
Sometime next week, traders will get their opportunity to jump on board what will almost certainly be an amazing ride over the next 18 to 24 months.
source: gold-eagle

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