GOLD Elliott Wave Technical Analysis

By: Lara Iriarte | Mon, Apr 6, 2015
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The main hourly Elliott wave count expected upwards movement. It had two targets, 1,212 and 1,223, for a possible extended fifth wave. The second target was met and exceeded slightly when price reached 1,224.35.

Summary: It looks like minute wave i is now over, but this is unconfirmed. A clear breach of the channel on the hourly chart is required for confidence that minute wave ii has begun. Minute wave ii is likely to show on the daily chart as one to three red candlesticks, and is most likely to end about the 0.382 Fibonacci ratio of minute wave i at 1,207, or a little less likely at the 0.618 Fibonacci ratio at 1,196. The trend at minor, intermediate, and cycle degrees remains up, but the short term trend sees Gold in a small correction at minute degree.


Main Daily Wave Count

XAU/USD - Main Daily Wave Count
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There are more than thirteen possible corrective structures that cycle wave b may take. At this stage it is unclear what degree to label this big movement. Primary wave A (or W) is an incomplete zigzag.

Cycle wave b may be a flat correction where primary wave A is a zigzag. Cycle wave b may be a triangle where primary wave A is a zigzag. Cycle wave b may be a combination where primary wave W is a zigzag. Cycle wave b may be a double zigzag with the first in the double, primary wave W, incomplete.

When the big zigzag now labelled primary wave A is complete, it is also possible that cycle wave b could be over there with the degree of labelling within it moved up one degree.

When intermediate wave (C) is a complete five wave structure alternate wave counts will be required to manage the various possibilities of cycle wave b continuing.

A new high above 1,308.10 would invalidate the alternate and confirm this main wave count at primary and cycle degree.

The upwards wave labelled intermediate wave (A) fits only as a five wave structure, a leading expanding diagonal. Within a leading diagonal the first, third and fifth waves are most commonly zigzags, and the fourth wave should overlap first wave price territory.

Because intermediate wave (A) subdivides as a five, intermediate wave (B) may not move beyond its start below 1,131.09.

At 1,320 intermediate wave (C) would reach equality in length with intermediate wave (A). If price keeps rising through this first target, or if when it gets there the structure is incomplete, then I would use the second target. At 1,429 intermediate wave (C) would reach 1.618 the length of intermediate wave (A).

Because intermediate wave (A) is a diagonal then it is highly likely intermediate wave (C) will be an impulse in order to exhibit alternation. Intermediate wave (C) may end about the upper edge of the channel drawn about primary wave A.

This wave count sill has problems of structure within primary wave 5 of cycle wave a:

It is for these reasons that I will retain the alternate until price confirms finally which wave count is correct and which is invalidated.

Volume for downwards movement of minor wave 2 is lower than the prior upwards movement of minor wave 1. Importantly, Wednesday's session sees volume increase beyond that seen for the prior three downwards days, which supports the main hourly wave count.

Minor wave 1 lasted seven days (no Fibonacci number) and minor wave 2 lasted a Fibonacci three days. If minor wave 3 exhibits a Fibonacci duration it may last thirteen days, which would see it end in nine more sessions (depends on how long the corrections within it last).

At 1,303 minor wave 3 would reach 1.618 the length of minor wave 1.

XAU/USD Hourly Chart
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Minute wave i is now a complete five wave impulse. Ratios within minute wave i are: there is no Fibonacci ratio between minuette waves (i) and (iii), and minuette wave (v) is just 1.55 longer than equality with minuette wave (iii). Minuette wave (v) shows slightly stronger upwards momentum than minuette wave (iii). This is a reasonably strong long fifth wave which is typical of Gold.

So far price remains within the channel drawn using Elliott's second technique about minute wave i. When this channel is breached by at least one full hourly candlestick below the lower trend line and not touching it that shall provide trend channel confirmation that minute wave i is over and minute wave ii has begun.

Minute wave ii is a second wave correction within a third wave one degree higher. It may be more brief and shallow than second waves often are. In the first instance it is more likely to correct to about the 0.382 Fibonacci ratio of minute wave i at 1,207. If price keeps falling through this first target the next expectation would be at the 0.618 Fibonacci ratio at 1,196.

Minute wave ii is likely to show up on the daily chart as one to three red candlesticks or doji so that minor wave 3 has the right look at the daily chart level.

There are several structural possibilities for minute wave ii. It should be choppy and overlapping. If it unfolds as an expanded flat or combination it may include a new high above its start at 1,224.35. There is no upper invalidation point for thi s reason.

Minute wave ii may not move beyond the start of minute wave i below 1,178.59.


Alternate Daily Wave Count

XAU/USD Daily Alternate Chart
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This alternate wave count sees Gold as still within a primary degree downwards trend, and within primary wave 5 intermediate wave (3) has begun.

At 957 primary wave 5 would reach equality in length with primary wave 1. Primary wave 5 may last a total Fibonacci 55 weeks. It is now beginning its 39th week.

The maroon channel about cycle wave a from the weekly chart is now breached by a few daily candlesticks and one weekly candlestick. If cycle wave a is incomplete this channel should not be breached. The breach of this channel was the first warning this wave count may be wrong.

This wave count still has a better fit in terms of better Fibonacci ratios, better subdivisions and more common structures within primary wave 5, in comparison to the main wave count above.

Within intermediate wave (3) minor wave 1 is a long extension. Within minor wave 1 minute waves iv and ii are grossly disproportionate, with minute wave iv more than 13 times the duration of minute wave i. This also reduces the probability of this wave count.

Although the invalidation point is at 1,308.10, this alternate wave count should be discarded long before that price point is reached. If the maroon channel is breached again by one full daily candlestick above it and not touching it then I would discard this alternate wave count.

A new low below 1,131.09 would confirm that intermediate wave (3) down is underway.

Minor wave 2 would now be a completed zigzag. If this alternate is correct it should show itself this week. It now expects a big increase in downwards momentum as a third wave at two degrees begins to gather momentum. An increase in volume as price moves lower would support this wave count. A new low below 1,178.59 would be a strong indication this wave count may be correct.

This alternate wave count remains technicall y possible. Because the implications are important I will continue to publish it at this stage.

 


This analysis is published about 05:16 p.m. EST.

 


 

Lara Iriarte

Author: Lara Iriarte

Lara Iriarte
elliottwavegold.com

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 ForexInfo.us) 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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