Precious metals got off to a great start this year and the form is holding nicely.
With bullish sentiment growing it might be best to wait for a correction in the new uptrend before considering a position on the next potential push higher.
[Editor's note: Are you new to Elliott Wave? Learn the basics in this article by Madden. ]
Sentiment and the Elliott Wave Principle go hand in hand, after all the WP is a detailed description of how groups of people behave. Of course the levels of optimism and pessimism will vary depending on the degree of wave structure but generally once you hear or see signs of high levels of sentiment it is worth taking note that a correction or even a reversal might not be far off. So peaks in price action often correspond with peaks in sentiment e.g. at the end of wave three or wave five; price rolls over in a disheartening correction and the levels of sentiment drop once again to allow the trend set up for the next leg drawing all back in once again repeating the cycle over and over.
Gold has started to make good ground off the 1,180.01 swing low which puts the continuation of the larger downtrend on hold for a while. The possible back to back three wave moves off the same swing low open the door for a triangle to unfold at this juncture. The [c] wave of a triangle requires another three wave move to terminate below the 1,433.95 swing high of wave [a]. In saying that we are looking at a possible running triangle and I would not expect price to trade above the 78.6% extension of wave [a] from [b] 1,380.00. Should price keep the momentum going above 1,400.00 I would begin to consider a larger degree swing low to be in place.