PnF: Silver Heading to $55 and Gold to $1880
Posted 03-29-2011 at 01:11 AM by forexer [Show Appreciation] What's This?
Those who know PnF charting know how useful they are to predicting Price Objectives. You may laugh at these predictions based on simple math, some boxes and points but in many cases, simple is right. Price objectives are extremely important when we're in a secular bull market because when prices go parabolic, chances are we'll get caught up in the frenzy, loose a sense of realism and end up with the herd, panicking to sell, most of the time at a bad price which is much lower from the top or an intermediate top.
Let me talk about Silver for a moment before moving on to Gold.
This is the PnF chart with a box size of 1 and a 3 box reversal method. I've masked the Xs and Os with green and red colors respectively to make the moves of supply and demand more obvious. This chart dates back to 2008 and beyond, showing the manipulation by the bullion banks which distorted much of the early picture. We start off from a 5 column bullish triangle break, giving us a buy signal. Then we went into a consolidation with a massive shakeout before demand immediately too over at the bottom of the manipulation phase. However, that demand failed to take prices to a new top, failing to generate a buy signal. Supply took over temporary and reversed price $4 lower, before demand stepped in, preventing price from making a lower bottom. Price very quickly rallied, generated a buy signal off a triple top break, rallying $13 off a base of $16. We then saw the termination of the up move with a 3 box reversal of Os. This gave us the signal to measure the vertical price objective. as of that time. I won;t go into the entire details of the criteria for starting a measure but i think it is justified for me to make a vertical price objective measurement based off this move. The calculations are shown in the PnF chart above and leads us to a price of $55 on SLV, which we can roughly equate to $55 on Silver. Not bad, for now.
Lets move on to Gold now.
The chart above is the PnF chart of GLD with setting box size of 2 and 3 point reversal method. Now this chart seems much more messy and complicated than the SLV chart but it was infact clearer and easier for me to calculate the price objectives. There are 2 mwthods to measure price objectives. One is the vertical method, which i use for SLV and the other is the horizontal method, which i will now explain in GLD. The Vertical method takes the continuous result of breakout either from a sell or but signal and does simple calculations to them, before subtracting or adding them to the top or bottom of the move, respectively. It can be said to be more aggressive in nature. The horizontal price objective calculation is based on the width of the base, leading up to the breakout. It is partly a function of the time taken for accumulation or distribution. The longer the time taken for the base to be formed, the more powerful the breakout will be expected to be. However, longer time not equals wider base because PnF takes out the function of time. Nevertheless, time is important in all investment decisions and i cannot exclude that.
The above chart has 2 mirrored sections. The left section is the workings for the vertical price objective and the right section is for the horizontal price objective. Starting of with the right section, we can identify a perfect, textbook styled move to measure our price objective. In the bolded circle, we had a sell signal, off a double bottom break. Immediately after wards, demand stepped in aggressively and rocketed price $24 higher before a got a termination of that upmove by a 3 (4) point reversal of Os. The upmove of Xs generated that critical buy signal by breaking a triple top at price level $122. The calculations are on the right section of the chart and leads us to a vertical price objective of $188 on GLD and roughly, $1880 on Gold itself. Circumstances are changing and looks like we are having another possible opportunity to revise our objective by the formation of a new breakout pattern. Price just needs to continue up on Xs.
On the right section of the chart, we can see the workings for the 2 horizontal price objective calculations. The first base i identified is for the first price objective, the second higher base is for the second. Basically we take the number of columns with consecutive staggering Xs and Os, take that count, multiplied by the box size, multiplied by 3 and adding that to the bottom of the base. For both bases we got a buy signal of a triple to break which is necessary for horizontal price objective calculations. We arrive at 2 fairly close price objectives of $144 and $158 ($1440 and $1580 for Gold). The time taken for the second base to for was 4 months, longer than the 3 months taken for the first base.
Let me talk about Silver for a moment before moving on to Gold.
This is the PnF chart with a box size of 1 and a 3 box reversal method. I've masked the Xs and Os with green and red colors respectively to make the moves of supply and demand more obvious. This chart dates back to 2008 and beyond, showing the manipulation by the bullion banks which distorted much of the early picture. We start off from a 5 column bullish triangle break, giving us a buy signal. Then we went into a consolidation with a massive shakeout before demand immediately too over at the bottom of the manipulation phase. However, that demand failed to take prices to a new top, failing to generate a buy signal. Supply took over temporary and reversed price $4 lower, before demand stepped in, preventing price from making a lower bottom. Price very quickly rallied, generated a buy signal off a triple top break, rallying $13 off a base of $16. We then saw the termination of the up move with a 3 box reversal of Os. This gave us the signal to measure the vertical price objective. as of that time. I won;t go into the entire details of the criteria for starting a measure but i think it is justified for me to make a vertical price objective measurement based off this move. The calculations are shown in the PnF chart above and leads us to a price of $55 on SLV, which we can roughly equate to $55 on Silver. Not bad, for now.
Lets move on to Gold now.
 | This image has been resized. Click this bar to view the full image. The original image is sized 1024x640. |
The chart above is the PnF chart of GLD with setting box size of 2 and 3 point reversal method. Now this chart seems much more messy and complicated than the SLV chart but it was infact clearer and easier for me to calculate the price objectives. There are 2 mwthods to measure price objectives. One is the vertical method, which i use for SLV and the other is the horizontal method, which i will now explain in GLD. The Vertical method takes the continuous result of breakout either from a sell or but signal and does simple calculations to them, before subtracting or adding them to the top or bottom of the move, respectively. It can be said to be more aggressive in nature. The horizontal price objective calculation is based on the width of the base, leading up to the breakout. It is partly a function of the time taken for accumulation or distribution. The longer the time taken for the base to be formed, the more powerful the breakout will be expected to be. However, longer time not equals wider base because PnF takes out the function of time. Nevertheless, time is important in all investment decisions and i cannot exclude that.
The above chart has 2 mirrored sections. The left section is the workings for the vertical price objective and the right section is for the horizontal price objective. Starting of with the right section, we can identify a perfect, textbook styled move to measure our price objective. In the bolded circle, we had a sell signal, off a double bottom break. Immediately after wards, demand stepped in aggressively and rocketed price $24 higher before a got a termination of that upmove by a 3 (4) point reversal of Os. The upmove of Xs generated that critical buy signal by breaking a triple top at price level $122. The calculations are on the right section of the chart and leads us to a vertical price objective of $188 on GLD and roughly, $1880 on Gold itself. Circumstances are changing and looks like we are having another possible opportunity to revise our objective by the formation of a new breakout pattern. Price just needs to continue up on Xs.
On the right section of the chart, we can see the workings for the 2 horizontal price objective calculations. The first base i identified is for the first price objective, the second higher base is for the second. Basically we take the number of columns with consecutive staggering Xs and Os, take that count, multiplied by the box size, multiplied by 3 and adding that to the bottom of the base. For both bases we got a buy signal of a triple to break which is necessary for horizontal price objective calculations. We arrive at 2 fairly close price objectives of $144 and $158 ($1440 and $1580 for Gold). The time taken for the second base to for was 4 months, longer than the 3 months taken for the first base.
All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.
No comments:
Post a Comment