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On September 26, the trading day following the outside down day of September 23, the market experienced a reversal day. Price made a new intraday low with a close near the top of the day's trading range, considerably above the prior day's close. This was decidedly not the type of price activity that normally follows an outside down day. The intraday low of the reversal day fell at $481.50, just a few dollars below an important support level (point J). The price activity of the Wave 5 pattern from the June high was complete. The reversal day fell precisely within the September 16-28 turning point period.

My time, price and pattern analysis all indicated an important change of trend was at hand. This was confirmed by the short-term reversal price activity. I went long at $489 on the close of the reversal day on the strength of the coincidence of time, price and pattern. When the timing analysis is confirmed by the price and pattern analysis, I have the confidence to enter the market at minimum risk and exposure. I placed my stop at $479.50, just $2 below the low of the day of entry (point K). My exposure was $9.50 per ounce or $475 per 50-ounce platinum contract.

Two days later, the market moved up strongly, confirming my judgment to take a long position and allowing me to raise the stop to $488, $2 below the low of the strong rally day of September 28. My minimum expectations of the rally were for the market to unfold in an ABC corrective pattern to a 38% or 50% retracement of the fifth wave swing from the August 25 high (Figure 2). The August 25 high at 562 to the September 26 low at $481.50 equaled $80.50. A 38% retracement would fall at $512 and a 50% retracement would fall at $522.

If the September 26 low was indeed a major trend change as I expected, this rally cycle should extend to at least 38% or 50% of the longer-term swing from the June high to the September low. A 38% retracement of this cycle would fall at $542 (Figure 1, point L) and a 50% retracement at $562 (point M). Price moved up sharply through the initial objectives of $512 and $522 without a correction of more than one day. Preservation of capital is one of the two fundamental rules of my trading plan. Each day I advanced my stop to protect profits as the market advanced. I raised my protective stop daily to the lower of a 62% retracement of the price swing from the September 26 low or the Gann 1?2 angle from that low.

At $544, just $2 above the 38% retracement of the June-September bear cycle, price made a top. This important price resistance level coincided exactly with the 1?1 Gann angle from the June high at the time of the top. The coincidence of an important Gann angle and a Fibonacci retracement level stopped the market dead in its tracks. Price moved down sharply on October 21, confirming the completion of the A wave or the first rally swing high.