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Friday, June 21, 2013

Price, Time, and Concentration In Gold

C1,C2,C3...C6,C(n) are cycles related by a function of time. In general, C2 is greater than C1, C3 is greater than C2, and so on. I often group cycles together as together as short-, intermediate-, long-term cycles. In shades of 1976, C1 and C2 illustrated the short-term cycles.

Markets displaying concentration around numerous cycles times (groups) tend to bottom. As the the number of time frames showing concentration increases, the stability (or robustness) of that bottom increases. For example, a market showing long-term concentration (C5 and C6) is more likely to form a secular bottom than a market showing only short-term concentration (C1 and C2).

Will gold's downside concentration equal that of 1976's? Possibly. And, possibly more. That is what patience is required until direction changes. C1 and C2 provide only a short-term picture of the setup. Cycles C3 and C3 provides an intermediate-term comparison - a different look to the decline.

Trading gold requires an understanding of not only price but also time and concentration.

Chart: Gold, London P.M. Fixed (Gold) and Cycle Z Scores (GOLDC3 and GOLDC4)


Chart: Hi Eric,

Referring to your observation on shades of 1976 in gold, could you be kind enough to clarify how cycle C2 is related to C1, and whether the price would decline further when zone -0.77 is tested in C2?

Thanks.

Regards, Kit

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