Gold: Markets tend to move in 5 waves, 3 in the direction of the trend (waves 1 - 3 - 5 ) and 2 against trend (waves 2- 4). The important thing to note here is that wave 5 on gold’s monthly bull chart has not occurred yet. Waves 2 and 4 show alternation in price action, which is indicative of countertrend moves in the 5 wave cycle.
Based on waves 1 and 3, wave 5 could very well have a $3,500 to $4,000 target because 5th waves in commodities tend to be very extended to the upside (see chart above).
Sentiment can be a fantastic contrary indicator. When there are extreme bearish readings, it generally implies the market is close to running out of sellers. 2014 started with extreme bearishness in Gold, as Goldman Sachs called it “a slam dunk” sell for lower gold prices in 2014....
But markets tend to change direction after testing price levels twice, commonly referred to as double bottom or double top, and gold now has a double bottom at $1,180 (see chart below).