Q4 Forecasts – What’s Included:
- Gold
- Silver
- Copper
- Crude Oil
Gold
Gold has progressed as we anticipated during Q3.
If you recall, back on June 28, we forecasted in our Q3 report the minimum waves were in place for a wave 4 triangle. Also, we suggested to “look for gold to begin a rally that carries the price higher for several weeks in wave 5. Once wave 5 is in place, then gold is at risk of its largest decline since Q2 2023.”
With the benefit of hindsight, we now know that gold finalised the wave 4 symmetrical triangle on June 26. Since then, gold has been rallying in a 5th wave as forecasted.
The RSI divergence is a symptom the trend is closer to the end than the beginning. It is unclear at this time whether the 5th wave is complete.
There are two wave counts we are following.
The first wave count suggests wave ((iii)) is topping now. Then, a brief decline may fall to $2559 in wave ((iv)) where the 38.2% Fibonacci retracement level sits. After the brief decline, then one final rally to new highs to complete wave ((v)) of 5.
There is an alternate count that is lower probability that suggests the wave ((v)) of 5 is in place or will be with one more brief high.
Bottom line, wave 5 of the impulse sequence is closer to the end than the beginning. Declines holding above $2559 will be considered a smaller degree wave 4 leading to new all-time highs.
Once wave 5 is in place, then gold is at risk of its largest decline since Q2 2023.
If gold does fall below $2483, then we’ll consider the prospects that a major top is in place and that gold may fall further to $2300-2350.
Silver
Silver continues in rally mode finishing Q3 higher than where it started. We’re viewing the rally from February 2024 as a breakout from a multi-year ascending triangle pattern with an incomplete Elliott wave sequence to the upside.
The price high in May is best viewed as wave 1 of a five-wave impulse pattern. The bearish divergence from the stochastics oscillator in May hinted that a brief correction was underway.
In our June 28 Q3 report, we forecasted “the larger trend remains to the upside though silver may need to use the first portion of Q3 to continue its correction lower. Anticipate a bullish turn between $25.56-$28.00 that eventually leads to new price highs with initial targets near $41-42.”
Silver bottomed in early August at $26.47, right inside the forecasted reversal zone. Therefore, we can anticipate a wave 3 rally to carry to new highs.
The September 23rd weekly candle briefly punched a new high, then reversed leaving behind a spinning top candlestick pattern. Since the spinning top formed near the old high from May 2024 AND since we are anticipating a wave 3 rally, we can anticipate the spinning top will be a brief consolidation pause prior to the next rally.
Though silver may decline further, any dips under this bullish wave count should hold above $26.47 as a rally is anticipated to $39 and possibly $50 in the coming months.
If $26.47 is broken to the downside, then we’ll need to reconsider other Elliott wave counts that lean towards a medium top.
Copper
The decline in Copper from May 20 to August 7 appears to be wave 2 of a larger impulse rally.
After forming a low at $3.92 on August 7, Copper has rallied to reach $4.79. This rally is taking on an impulsive structure. There are a few Elliott Wave counts available, but we’ll give precedence to the models that allow for a developing bullish impulse pattern.
The rally from September 5 is strong and is acting like a 3rd wave. The trend appears firmly planted to the upside and declines are likely temporary and viewed as smaller degree wave 2 or wave 4.
If Copper were to decline to $4.48, it would be considered perfectly normal and possibly labelled as a wave ((iv)) or smaller degree wave (ii) of ((iii)).
While declines are viewed as temporary, rallies may continue to push higher. Potential topside targets include $4.90-$5.10 prior to a larger pullback developing.
Bottom line, 5-6% price declines are viewed as temporary within a larger rally sequence. If $4.90-$5.10 is successfully reached, then we’ll count through the waves to see how mature the rally is.
If Copper were to decline below $4.27, then we will need to reassess the wave count as that decline would be much deeper than anticipated under a bullish impulse pattern.
Crude Oil
The roller coaster ride for crude oil continued in Q3 and appears to be the case for Q4 as well.
In our June 28 Q3 report, we forecasted:
“The outlook for crude oil in Q3 is bearish. The Elliott wave model we are following suggests that crude oil prices would remain below the April high of $87.60 and make a downturn to retest the December 2023 low at $67.74.”
Crude oil topped out at $84.49 on July 5, then reached a low of $65.29.
The challenge we are faced with now is that the decline was not crisp and clean as we would expect from the ‘C’ leg of an Elliott wave pattern.
Therefore, if the pattern doesn’t walk like a duck, quack like a duck, or look like a duck, then it probably isn’t a duck. In the case of crude oil, we are shifting our focus over to the symmetrical triangle pattern introduced within the Q3 report.
Within the triangle pattern, each wave would be a zigzag, multiple zigzag, or triangle pattern. In the case of crude oil, we are counting wave E of the triangle as a triangle pattern. This places the end of the triangle at the August 29 high of $76.87.
The decline in early September is viewed as wave 1 of (C).The current rally from the $65.29 low is counted as wave 2 of (C). This means wave 3 of (C) is about to begin to the downside.
Let’s talk numbers on this Elliott wave model. Wave relationships for wave 3 down is around $54-56. This doesn’t mean crude oil HAS to reach and pivot at this zone. This price zone would be an area of interest for crude oil to pause for a small rally.
Then, a small wave 4 rally may carry higher about 10% from the end of wave 3. This leaves wave 5 to finish off with one more low between $45-51.
If crude oil punches above $76.87, then the wave model described above is voided and we’ll need to re-evaluate.
Understanding How to Trade Commodities
We included some commodities within this Q4 report because their pricing is all around us. For example, every time you drive down the road, you are reminded of the price of gasoline due to the numerous fuel stations. Crude oil plays a part in the final cost of gasoline.
Therefore, understanding how to trade commodities is important to accessing those visible markets.
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