It is important to keep in mind that this is a trend projection.
An exogenous event or a change in environment such as a liquidity crisis and equity market crash will test and can certainly alter this trend. As traders we must be mindful of what the market tells us.
As you may recall, I like to use these kind of charts as indications of the progress of a market, rather than hard and fast rules.
For example, the correction we see today in gold is to be expected as we ran well above trend over the past few days. Is this the consolidation we have been expecting around 1375? Very possibly. That objective was set months ago and is more an indicative target than a hard buy or sell stop. After a breakout from a cup and handle, price almost always gets ahead of itself and undergoes a consolidative correction. So, there we may now be.
The equity market SP 500 December futures appear to be hesitating ahead of tomorrow's Non-Farm Payrolls report. It was at the top of a short term trend channel at 1163 with its lower bound at 1136. The breakdown of the NDX yesterday was indicative. That range in the futures is 2025 to 1965. A break of trend in the SP futures will set up a test of big support at 1120. The Feds seem to be all over these markets, so I prefer to play it tight, light, and short term until we see a confirmed change in trend.
It is the relationship of the current price to the chart that is most important, with time as a factor.
