For Gold Traders, a Fibonacci Road Map
by Rick Ackerman on April 1, 2010 5:22 am
What does Fibonacci analysis predict for gold over the next year? We recently heard from a skillful practitioner of the dark arts, “Mestre Socrates,” who sees $1490 an ounce by around next May. But there’s a chance the path will not be smooth, he cautions, since prices could first dip as low as $1012 – more than $100 beneath current levels. That would represent a great buying opportunity, however, according to Socrates – a place where bulls could back up the truck. How confident is he? Socrates notes that gold’s long-term price movements have been precisely foreseeable on the basis of Fibonacci sequences that have traced out cup-and-handle formations. “Gold appears to have a predictable trading pattern of a new high, a slam down to the previous Fib level, reworking back to the previous high, a dull six-month ‘handle formation’ period, and then a two or three-month rally to a new Fib level. This has given workable projections for the gold price years in advance.”