GOLD Elliott Wave Technical Analysis

By: Lara Iriarte | Thu, Sep 12, 2013
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Yesterday's analysis expected upwards movement. Price has moved sideways in a small range. This lack of upwards movement has made me take another look at the bigger picture, and I have adjusted my alternate wave count accordingly today.

At this stage the situation with gold is unclear. This is why I have so many alternates; I do not normally publish this many alternate ideas. We need to see the parallel channel on the hourly chart clearly breached by upwards movement to have confidence that the upwards trend has resumed. How high that next wave goes will indicate which wave count is correct, and we may then have clarity.

Main Wave Count

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This wave count agrees with MACD. If upwards movement is within a third wave, then it should show an increase in upwards momentum beyond the end of minor wave 1. Because we have not seen that increase in upwards momentum yet (on the one to six hourly time frames) we may not have seen the middle of the third wave.

At 1,545 minor wave 3 would reach 1.618 the length of minor wave 1.

Within minor wave 3 subminuette wave ii may not move beyond the start of subminuette wave i. This wave count is invalidated at minute wave degree with movement below 1,352.45.

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Another slight new low has again changed the structure of this downwards wave. If it is a correction, then it may have been a single zigzag with an ending diagonal for micro wave C.

The subdivisions all fit nicely and micro wave C is just 0.09 short of equality with micro wave A. The only problem with this wave count is the part of the diagonal, which does not fit within its trend lines. This looks odd, and is another reason why I have reanalysed this downwards movement and why my alternate is today different.

We still need to see the parallel channel containing this downwards movement breached to have confirmation that it is over and the next upwards wave is underway. The strength and momentum of the next wave upwards will show which of the two ideas for this main wave count is correct: if it is a very strong movement then it may be the middle of a third wave, and if it shows a decrease in momentum from the prior wave upwards then it may be a fifth wave. Either way, this wave count still requires at least one more upwards wave.

At 1,489 subminuette wave iii would reach 1.618 the length of subminuette wave i.

While price remains firmly within the parallel channel the invalidation point will remain at 1,352.45. Subminuette wave ii may not move beyond the start of subminuette wave i.

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It is possible that this downwards movement is a fourth wave correction for minute wave iv, and that minute wave iii is complete.

Minute wave iii is just 2.51 longer than 1.618 the length of minute wave i.

This wave count also expects more upwards movement from gold, but for a fifth wave and not the middle of a third. The difference is in expected momentum; the first daily chart expects a strong increase in momentum.

Minute wave iv may not move into minute wave i price territory. This wave count is invalidated with movement below 1,344.26.

Alternate Wave Count

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If cycle wave a is unfolding as an impulse then recent upwards movement is primary wave 4 within the impulse. Primary wave 4 may not move into primary wave 1 price territory. This wave count is invalidated with movement above 1,532.90.

Primary wave 4 is either incomplete (subdivisions would be the same as the main wave count) or it is possible it is over.

This wave count is an alternate because there are no Fibonacci ratios at intermediate degree within primary wave 3 of cycle wave III. I have spent much time trying to see a better fit in terms of ratios, which meets all EW rules for this wave count, but so far I cannot. This does not mean it does not exist!

There is no downwards invalidation point for this alternate. Movement below 1,344.26 would confirm it.

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This 2 hourly chart shows all of intermediate wave (C). The problem of the third wave being the shortest is resolved if the first wave ends lower, and the second wave is an expanded flat correction. However, with this wave count there are now no Fibonacci ratios between minor waves 1, 3 and 5. This is unusual for gold and so reduces the probability of this wave count.

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I am considering this idea because recent downwards movement looks and fits best as a leading diagonal. The diagonal may be over, or the current sideways movement may be a fourth wave triangle and the final fifth wave down may need to complete.

Leading diagonals in first wave positions are usually followed by deep second wave corrections. This wave count also expects upwards movement but not above 1,433.83, whereas the main wave count requires movement above this point.



Lara Iriarte

Author: Lara Iriarte

Lara Iriarte

Lara Iriarte

Elliott wave is one of the more difficult and complicated technical analysis tools. When done right it can be uncannily accurate.

I have been using the Elliott wave principle to analyse up to five markets a day since 2008. I began Elliott Wave Forex (originally in 2009 to provide daily analysis of EURUSD and GBPUSD, then I began Elliott Wave Stock Market in 2010. Elliott Wave Gold began in August, 2013. Currently I provide daily analysis of Gold on this site, and daily analysis of the S&P 500 on Elliott Wave Stock Market for its members.

I have a science background (BSc) which has trained me to think logically and be evidence focussed. Over the years I have seen no market movement which does not fit into the clear and restrictive rules for Elliott wave structures.

I have members who are fund managers, institutional investors and professional traders.

If you want to learn how to apply the Elliott wave principle to any market my analysis service is designed to teach you, daily, how to do this.

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