I called the bottom of the gold market – here’s how

Yesterday was one of the most volatile days in the Dow that I can recall.

The Dow swung from an early 300-point rally to a sharp decline of 400 points within four hours.

But I'm not talking about the Dow today. Today, I'm talking about gold, and how, using Elliott wave theory, I called the bottom of the gold market.

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I knew I was right about gold

the market had hit a major low

In early November, it was trading at $1,133 and was about to bounce back. This was the chart I posted then:

As you can see, points one to five show this trend fits perfectly into my Elliott wave model.

The market shows five peaks and troughs. According to Elliott wave theory, the fifth marks point at which the trend always changes direction.

That's exactly what happened on 11 November. The trend changed direction and the price of gold started heading up, just as I predicted.

What was happening on the trading floor?

What we saw on 11 Novemberwas a short squeeze.

When the price of gold began to rise, traders holding short positions began suffering losses. As they abandoned their short positions, they became buyers, and so the price of gold rose even faster.

All of this internal and patterned action was displayed in the Elliott waves.

I expect gold price to rise in 2015 in the short term

My 2014 forecast is still panning out. This week, gold has rallied $100 off the November low.

So far, the trend remains up.

This snapshot of the commitment of traders data from the Chicago Board of Trade shows an increase in speculators trading long and a decrease in speculators trading short in the first week of 2015.

The upward trend remains in place

Now, zooming in on the rally starting on 11 November, I can see various waves are spiky and overlapping but it's totally confusing from the Elliott wave perspective. I really cannot see any decent patterns here at all, and so I will abandon looking for Elliott waves.

I have similar thoughts about tramlines there aren't any. So without Elliott waves and tramlines, what do I have left?

Of course, I could draw in the Fibonacci ratios from the various wave highs and lows. But I think I will leave that as an exercise for you, dear reader!

I will say this: the highs and lows have been trending higher and that means one thing: the uptrend is in place for now.