Gold, Oil, Dollar, Commodities - Chartsedge gold cycle chart for 12/15 week; and some other comments

Above is Chartsedge's weekly cycle chart for gold for the upcoming week. [Chartsedge also provides cycle forecasting charts for the month and upcoming three-month (quarter) period, by subscription; check the Chartsedge website listed in the "other sites of interest" to the right.]

Some additional comments of my own - if you check the bigger picture charts of gold I have posted here, you will see that I'm among those who believe gold has made a bottom here, most likely counted in Elliott Wave terms as a large WXY (there may be other EW counts, and you can of course also look at Tony Caldaro's site (also under the "other sites of interest") to check out his charts and EW counts on gold. The question being, what's next? I have a long-term Fibonacci objective at 1192, and there are others who are counting (either via Wolfe waves, Lucas numbers, or other methods) and expecting gold in the 1000-1200 range. Perhaps this will express as a "B" wave which could either be a regular flat "B" wave high that doesn't make a new high, or could be an expanded flat that does see its "B" wave make a new high. Either way, it should make this climb over a multi-month period into early to mid-2009. My chart below shows some Fibonacci levels that should prove significant during this move; and, I marked a hypothetical Andrews fork that may provide channel support too.

As trading vehicles, I typically use DGP (double-long gold) when going long gold, and DZZ (double-short gold) when short.

My chart of the dollar includes some Fibonacci retrace levels for the expected, accompanying move down. I don't use etf's for trading the dollar, as such, although UUP is an etf that tracks the dollar (1:1 correspondence, not double). While I didn't mark an Andrews pitchfork, I did mark some hypothetical channel lines (similar to the way I mark my VIX charts):


I would expect this inflationary wave to be accompanied by similar upward rallies in oil (for which I normally use the etn's* DXO (double-long) for long and DTO (double-short) for short [the etf's DIG (long) and DUG (double-short) can be used indirectly, but they track the oil companies' equities] ... and also, other commodities, including agricultural commodities (soybeans (beans in the teens again?), corn, etc.), again moving inversely to a continuation of the weakening we've begun to see in the dollar.

For agricultural commodities, I like to use the etf DAG (double-long) to be long, and AGA (double-short) to be short - mainly keeping an eye on soybeans, but this etf tracks the agricultural commodities generally.

Later, toward the end of 2009 and into 2010, a "C" wave of such a large flat should carry gold back down to re-test its recent lows. This deflationary wave should also see corresponding moves down, again, in oil and commodities, accompanied by another move upward in the dollar. This multi-month wave may carry into 2011 at least.

Recap: Currently I am long gold, using DGP, and long oil using DXO*. I will go long agricultural commodites with DAG. For swing trading positions, I will expect to hold these long positions into early to mid-2009.

[*Exchange-traded notes (ETN's) are unlike exchange-traded funds (ETF's) in the way they are structured, and could carry more risk to the extent the underlying note requires a debt financing element. You can find more information via Wikipedia or other research sources. For now, during the time frame into mid-2009, I am expecting ETN's to continue to be tradable. After that, my concern about the financial sector will probably lead me to abandon ETN's and only use ETF's or other vehicles that seem safe (maybe during the subsequent deflationary wave, holding dollars (cash) will be just fine.]