Tracking Gold With Elliott and Gann
K.H.K.H. Gin, Singapore
Here's a tardy submission to the July Mystery Chart contest that I found intriguing. —Ed.
I am a currency trader, corporate and position trader for a bank in Singapore and follow COMEX gold,
Standard & Poor's 500, Treasury bonds, Eurobonds and the four major currencies on the IMM. The July
Mystery Chart is Comex gold, April 1990. The methods I used to analyze and trade it were conventional
chart pattern recognition, Elliott, Gann and proprietary technical indicators and models (Figure 1).
I use the spot gold charts from Teletrac. From June to September 1989, the overall sentiment was bearish
for gold. However, at point B, gold could not close lower than the previous low at point O in June.
Immediately, I questioned whether we had a double bottom in the making. If that were the case, then my
current Elliott wave count indicated that this was a bear market rally. An Elliott wave bear market rally is
typically a three-wave advance with each wave labeled A-B-C, respectively (Figure 2). Waves A and B
are each three waves (labeled a-b-c), while wave C is composed of five waves. An additional facet of
Elliott wave theory is that waves A and C will have a price relationship based on Fibonacci ratios.
Therefore, the length of wave C should be one of the following percentages of wave A: 38.2%; 50%;
61.8%; 100%; 138.2%; or 161.8%.