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GOLD Elliott Wave Technical Analysis

Yesterday's alternate wave count was confirmed with movement above 1,324.09. At that stage the wave count expected more upwards movement towards a most likely target at 1,338.16. Price moved substantially higher than the target, but remains below the invalidation point.

This upwards movement is most likely a fourth wave correction. Movement below 1,307.88 would confirm a fifth wave down.

The alternate wave count expects more upwards movement. It would be confirmed with movement above 1,374.14.

I judge these wave counts to have a close to even probability at this stage. The nice thing about them is the confirmation / invalidation point at 1,374.14 is very close by. If the alternate is correct it should be confirmed within a few hours.

Click on the charts below to enlarge.

Main Wave Count.

XAU/USD Daily Chart
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The bigger picture sees gold in a downwards trending five wave impulse at cycle degree for cycle wave a. Within this downwards impulse primary waves 1 through to 4 are complete. The final fifth wave down has begun.

The big maroon channel is drawn on the weekly chart using Elliott's first technique, and copied over here. Draw the first trend line from the low of primary wave 1 at 1,532.90 to the low of primary wave 3, then place a parallel copy upon the high of primary wave 2 at 1,796.05. Expect primary wave 5 to find support at the lower end of this channel (or possibly to overshoot the channel if we see a fifth wave thrust).

At 1,046 primary wave 5 would reach equality in length with primary wave 1.

Within primary wave 5 minor wave 3 within intermediate wave (1) would reach 2.618 the length of minor wave 1 at 1,260.

Minor wave 4 may not move into minor wave 1 price territory. This wave count is invalidated with movement above 1,374.17.

XAU/USD Hourly Chart
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Movement above 1,324.09 and outside the pink parallel channel invalidated yesterday's main wave count and confirmed this wave count, which yesterday was an alternate.

Upwards movement may be minor wave 4.

Minor wave 2 was a deep 71% zigzag. There was no Fibonacci ratio between minute waves a and c within it, and minute wave c was longer than minute wave a.

So far, if this upwards movement is minor wave 4, then it should be over here. There is very little room left for further upwards movement for this wave count. Minor wave 4 is just over the 0.618 Fibonacci ratio of minor wave 3. Within it minute wave c is 3.77 longer than 4.236 the length of minute wave a.

There is some alternation between minor waves 2 and 4. The a and c waves within these zigzags have different proportions. However, both are zigzags and both are deep corrections. The strength of minute wave c within minor wave 4 indicates a third wave, which fits the alternate below better.

Minor wave 4 may not move into minor wave 1 price territory. This wave count is invalidated with movement above 1,374.17.

If price moves above 1,374.17 then the alternate below would be confirmed.

Alternate Wave Count.

XAU/USD Daily Alternate Wave Count Chart
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There are still several possible structures for primary wave 4 if it is continuing. So far we have a three down from the high at 1,433.83. This three down is less than 90% the length of intermediate wave (W) so a flat correction can be ruled out. This structure may be a double zigzag or double combination. If a double combination the second structure labeled intermediate wave (Y) may be either a flat or triangle.

It is most likely at this stage that primary wave 4 is continuing is a double zigzag. Intermediate wave (Y) is most likely to be a zigzag.

Primary wave 2 was a deep 68% regular flat correction lasting 54 weeks. Given the guideline of alternation we may expect primary wave 4 to continue for longer, possibly for another 10 weeks to last a Fibonacci 21 (give or take one week either side of this). If it completed as a double zigzag there would be nice alternation in structure with primary wave 2.

Primary wave 4 has already passed the 0.382 Fibonacci ratio, so it may end about the 0.618 Fibonacci ratio of primary wave 3 at 1,529.97. It should find resistance at the upper edge of the parallel channel drawn here using Elliott's first technique.

Primary wave 4 may not move into primary wave 1 price territory. This wave count is invalidated with movement above 1,532.90.

XAU/USD Hourly Alternate Wave Count Chart
Larger Image

Within the new upwards trend the strong upwards movement from Wednesday looks very much like a third wave. Within intermediate wave (Y) minor wave A may be unfolding as a five wave impulse.

Within minor wave A minute wave iv may not move into minute wave 1 price territory. This wave count is invalidated with movement below 1,307.88.

Minute wave ii was a relatively deep zigzag. So far minute wave iv looks to be unfolding as a shallow flat correction. It may end about the 0.236 Fibonacci ratio at 1,350.53.

If it moves below this point then the next expectation would be the 0.382 Fibonacci ratio at 1,340.02.

When minute wave iv is completed then more upwards movement for minute wave v should move price to new highs. Minute wave iv should be over within a few hours.


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