XAU update, again.

xau july 7 2014

Here is that triangle again in the XAU. All the legs within the triangle should be three-wave structures and there should be 5 of them. With one exception, wave e, they all definitely are. e may not be over yet as it can still go higher provided it does not exceed the height of the c leg. The “mouth”of this triangle suggests a target at about 60 (or even lower). EWavers, the purists that is, take umbrage with using other technical indicators, it pollutes and distracts the thinking. I do not see why one would not use additional indicators if they simple corroborate the EW analysis. In this case the MACD has been dropping for nearly a year and the RSI is clearly overbought having been above the 70% line only once before in the previous 3 years (all I can get on ScharpCharts). By the time we get to 60, if indeed we do, gold stocks will have lost about 75% of their peak values and should then be a screaming buy at least for a very solid bounce. The XAU contains 13 gold stocks, mostly the big ones like ABX, Goldcorp Kinross etc. so what applies to this group of stocks does not necessarily apply to all gold stocks.  For examples, DGC, Detour Gold, no doubt, already made its low as we pointed out months ago.