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Each day we publish our view on the near-term trend on the S&P 500, EUR/USD, Gold and Crude Oil with potential levels to watch and the likelihood of a trend reversal.

Market Trends

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Each day we publish our view on the near-term trend on the S&P 500, EUR/USD, Gold and Crude Oil with potential levels to watch and the likelihood of a trend reversal.

How a Fibonacci Cluster Showed an Important Resistance Level in Gold

How a Fibonacci Cluster Showed an Important Resistance Level in Gold
Senior Analyst Jeffrey Kennedy shares techniques that helped spot a trading opportunity.

By Elliott Wave International

If you use Elliott in your technical analysis, you may already use Fibonacci ratios to determine targets and retracement levels in your charts.

But have you heard of "Fibonacci Clusters?"

Elliott Wave Junctures editor Jeffrey Kennedy shares his charts to illustrate this technique, which he recently used to identify a critical turning point in Gold. The following lesson is adapted from his March 26 video. Get more lessons from Jeffrey in the free report, 6 Lessons to Help You Spot Trading Opportunities in Any Market.

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Performing multiple Fibonacci calculations of a price move often yields concentrations of Fibonacci levels, which act as barriers to price moves.

How do you create a Fibonacci Cluster of support or resistance?

In the following chart, you can see how to draw a line from the most recent swing high to the relevant low� and then connect previous higher highs to the same pivotal low. In the rectangular box, notice where the advance in GCA reversed from a cluster:

Kennedy covers other examples to explain how slingshots, reverse divergence and positive/negative reversals highlight the same momentum signature:

A bullish slingshot forms when prices make higher lows while underlying momentum surpasses previous extremes. Conversely, a bearish slingshot occurs when prices make lower highs while momentum exceeds prior readings.

In subsequent days, Gold prices fell to below $1550.

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Learn How You Can Use Fibonacci to Improve Your Trading If you'd like to learn more about Fibonacci and how to apply it to your trading strategy, download the entire 14-page free eBook, How You Can Use Fibonacci to Improve Your Trading. EWI Senior Tutorial Instructor Wayne Gorman explains: The Golden Spiral, the Golden Ratio, and the Golden Section How to use Fibonacci Ratios/Multiples in forecasting How to identify market targets and turning points in the markets you trade And more! See how easy it is to use Fibonacci in your trading. Download your free eBook today >>

This article was syndicated by Elliott Wave International and was originally published under the headline How a Fibonacci Cluster Showed an Important Resistance Level in Gold. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Market Trends

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Each day we publish our view on the near-term trend on the S&P 500, EUR/USD, Gold and Crude Oil with potential levels to watch and the likelihood of a trend reversal.

Market Trends

Premium Content

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Each day we publish our view on the near-term trend on the S&P 500, EUR/USD, Gold and Crude Oil with potential levels to watch and the likelihood of a trend reversal.

An Urgent New Resource from Market Technician Bob Prechter

On Tuesday afternoon (April 23), Robert Prechter, a famed market technician known for calling the roaring bull market of the '80s, the 1987 crash and the March 2009 stock market low, published an urgent new issue of his Elliott Wave Theorist.

This issue is so powerful -- and so urgent -- that EWI has unlocked the first two pages for you to read with no obligation to buy.

Every issue of the Theorist provides you with a unique look at tomorrow's news today. This issue meets that high standard and more. It's one of the most powerful and revealing issues of the Theorist subscribers will ever read. Now, Prechter is not always right. Unfortunately, no market analyst is. But there's one thing his readers know for certain: When Prechter revs up his urgency, he sees something big on the horizon.

Due to the timely nature of this issue, EWI cannot make the first two pages available indefinitely, so they've set a date of May 8 to end this special promotion -- at which time the first two pages will no longer be available for free.

Please follow this link to get instant access to the first two pages of Prechter's urgent market letter

Sentiment Drives Stock Prices

By Thierry Laduguie

If you are on Twitter you will have noticed an increase in the number of posts about gold. Gold crashed earlier this week and that’s why everyone is talking about it. It appears that many traders were on the wrong side. The yellow metal has been in a bull market for years, and as we know, bull markets always come to an end. The question is: is this the end of the bull market in gold? It could be but I won’t bet on it, I am not an expert on gold. What I can say is that commodity prices, like stocks prices can suddenly drop at a time when there is no evidence of deteriorating fundamentals. This is caused by a change in sentiment.

On 20th March, the BTI, a sentiment indicator, turned bearish. From that moment I knew that stocks were at the forefront of a significant decline.

Contrary to popular opinion, economic and corporate news do not drive stock prices. Stock prices and many other assets such as gold are driven by sentiment. Positive sentiment is bullish for stocks while negative sentiment is bearish. It does not matter whether the news is positive or negative, what matters to the market trend is the state of investors’ sentiment. Corporate and economic news have a temporary impact on prices when they are released, and we can not ignore this fact, but short to long term trends are built on sentiment.

So how do we measure sentiment?

I measure sentiment with the BTI which is a proprietary indicator. This indicator moves up and down according to sentiment, when it reaches an extreme, stock markets change direction.

 

Note on the above FTSE 100 chart, the BTI turned up on 29 November 2012 and continued to rise until 19 March. This period was under the influence of positive sentiment, stock prices rose. The BTI turned down on 20 March, indicating a period of negative sentiment. Stock prices declined.

Another indicator derived from the BTI gave an early warning signal in early March:

 

Positive sentiment was receding as shown by the declining line after 28 February (the top). During the period that followed the stock market continued to rise but the sentiment indicator continued to decline (bearish divergence). That was a warning that the FTSE 100 trend would turn down.

If you've been taken by surprise by the recent sell off I suggest that you subscribe to my FTSE short term forecast. Click here to subscribe.

New 5-Part Video Resource for Commodity Investors & Traders

If you read commodity news, you've probably noticed a trend: Seems like no one likes commodities any more! Here are some recent headlines:

    "Hedge Funds Cut Bets Most Since ’08 as Prices Slump: Commodities "
    "Credit Suisse Lowers Price Targets on Commodities, Prices Sink "
    "World Markets Drive Down Commodity Prices"

The recent downtrend has caught many traders off guard.

So, our friends at Elliott Wave International have released a free video report for commodity traders and investors: "15 Commodity Opportunities You Should Be Watching Right Now."

This free report was designed to help you capture the next big moves in commodities.

Over the course of 5 days, EWI's Chief Commodity Analyst Jeffrey Kennedy will walk you through the biggest trading opportunities in 15 major commodity markets for 2013 and beyond.

The action begins Monday, April 22, when the first video posts. The 5-part video series will be released each day through Friday, April 26.

Learn more about EWI's new commodity resource and sign up to get an email alert as soon as the first video goes online

Market Trends

Premium Content

Please login or register

Each day we publish our view on the near-term trend on the S&P 500, EUR/USD, Gold and Crude Oil with potential levels to watch and the likelihood of a trend reversal.

Market Trends

Premium Content

Please login or register

Each day we publish our view on the near-term trend on the S&P 500, EUR/USD, Gold and Crude Oil with potential levels to watch and the likelihood of a trend reversal.