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GOLD Elliott Wave Technical Analysis

Another one to three days of downwards movement to 1,136 or 1,123 was expected before a second wave correction began. This is not what happened. The hourly Elliott wave count was invalidated with a new high above 1,160.

Summary: Minute wave i is over and minute wave ii is underway. Minute wave ii may end when price touches the upper edge of the blue base channel on the daily chart. It may end quite quickly, in one more day. I will use the corrective channel on the hourly chart to confirm when minute wave ii is over and the next wave, minute wave iii downwards, is underway. The next wave down should be a strong third wave.

Main Daily Wave Count

Gold Daily Wave Count Chart
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This main wave count sees Gold as still within a primary degree downwards trend, and within primary wave 5 intermediate wave (3) has begun. At 956.97 primary wave 5 would reach equality in length with primary wave 1. For Silver and GDX this idea, that the primary trend is down, is the only remaining wave count. This main wave count has a higher probability than the alternate below.

Within cycle wave a primary wave 1 lasted a Fibonacci 3 weeks, primary wave 2 lasted 53 weeks (two short of a Fibonacci 55), primary wave 3 lasted 37 weeks (three more than a Fibonacci 34), and primary wave 4 lasted 54 weeks (one short of a Fibonacci 55).

Primary wave 5 is now in its 36th week and the structure is incomplete. The next Fibonacci number in the sequence is 55 which would see primary wave 5 continue for a further 19 weeks, give or take up to three either side of this number. Although I am expecting primary wave 5 to be equal in length with primary wave 1 that does not mean it must also be equal in duration.

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 is a warning this wave count may be wrong, and so I will still retain the alternate.

Draw the maroon trend line on a weekly chart on a semi-log scale, and copy it over to a daily chart also on a semi-log scale (see this analysis for a weekly chart).

To see daily charts showing the whole of intermediate wave (1) from its start at 1,345.22, and an explanation of why this main wave count has a higher probability than the alternate, see the last analysis showing charts to that point here.

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

Within minor wave 3 minute wave ii may not move beyond the start of minute wave i above 1,223.33.

Within intermediate wave (3) minor wave 1 is a completed impulse lasting 18 days. Minor wave 2 is a completed double flat correction which lasted 9 days, exactly half the duration of minor wave 1. Because this is a second wave correction within a third wave one degree higher it is more shallow than normal due to the strong downwards pull of intermediate wave (3).

Minor wave 3 may total either a Fibonacci 21 or 34 days, depending on how long the corrections within it take. So far it has lasted 12 days. At 1,055 minor wave 3 would reach 1.618 the length of minor wave 1. Minor wave 3 may only subdivide as an impulse.

Draw a base channel about minor waves 1 and 2. Minor wave 3 should have the power to break through support at the lower edge. Along the way down upwards corrections should find resistance at the upper edge. While the lower edge is not breached (so far it is only overshot and not clearly breached) the alternate wave count should be considered as a possibility.

Since the top labelled intermediate wave (2) volume is still strongest on down days.

On Balance Volume shows no divergence with price at the end of minute wave i. If the alternate daily wave count is correct OBV should breach the blue trend line drawn there, which would provide confidence in the alternate wave count.

Hourly Wave Count

Gold Hourly Wave Count Chart
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Minute wave i was confirmed as over when yesterday's hourly wave count was invalidated with a new high above 1,160. Minuette wave (iv) was a regular contracting triangle and not a double zigzag. I had discarded the triangle idea because the trend lines do not converge very clearly and the triangle has an atypical look, but the subdivisions are all correct and all Elliott wave rules are met.

Ratios within minute wave i are: minuette wave (iii) is 5.68 short of 2.618 the length of minuette wave (i), and minuette wave (v) is just 0.05 short of 0.618 the length of minuette wave (i).

At this stage minute wave ii may be close to completion. If price touches the upper blue trend line I would expect it to end there. It looks like it may be much more brief than three or five days and may end in just two daily candlesticks.

Within the zigzag of minute wave ii minuette wave (c) has passed equality and 1.618 the length of minuette wave (i). The next Fibonacci ratio in the sequence 2.618 would see minute wave ii breach the upper edge of the dark blue base channel from the daily chart, which is highly unlikely. Minuette wave (c) may not exhibit a Fibonacci ratio to minuette wave (a).

At this stage the best way to see where minute wave ii should end would be the upper edge of the base channel; when price touches that trend line I would expect minute wave ii is either over or extremely close to completion. It should end there and that trend line should precipitate the next wave down.

So far minute wave ii looks like it may be unfolding as a zigzag, which is a relatively brief structure. Minuette wave (c) is an impulse which is incomplete. Within minuette wave (c) subminuette wave iv may not move into subminuette wave i price territory below 1,152.98.

Draw a corrective channel about minute wave ii: draw the first trend line from the start of minuette wave (a) to the end of minuette wave (b), then place a parallel copy on the end of minuette wave (a). The upper edge of this channel is now breached, and while minute wave ii continues it should provide support. When this channel is breached to the downside by clear downwards movement that shall provide trend channel confirmation that minute wave ii is over and minute wave iii is underway.

If the upper edge of the blue base channel is breached by one full daily candlestick above it and not touching it then this main wave count would substantially reduce in probability and the alternate below would increase in probability.

Minute wave ii may not move beyond the start of minute wave i above 1,223.33. If this price point is breached I will discard this main wave count, and the alternate below would be confirmed.

Alternate Daily Wave Count

Gold Alternate Daily Wave Count Chart
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At this stage I judge this alternate wave count to have a lower probability. This is the point where this alternate wave count now diverges from the main wave count.

A new high above 1,223.33 would invalidate the main wave count and confirm this alternate. Before that price point is passed a clear breach of the blue channel about intermediate wave (2) with one full daily candlestick above the upper blue trend line and not touching it would provide trend channel confirmation for this wave count. At that stage it would substantially increase in probability and I would swap the main and alternate wave counts over.

Intermediate wave (3) must move beyond the end of intermediate wave (1) above 1,308.10. A new high above this point would provide full and final confirmation of this alternate wave count.

This wave count sees a five wave impulse down for cycle wave a complete, and primary wave 5 within it a completed five wave impulse. The new upwards trend at cycle degree should last one to several years and must begin on the daily chart with a clear five up.

The first five up may be a complete leading expanding diagonal. Within leading diagonals the second and fourth waves must subdivide as zigzags. The first, third and fifth waves are most commonly zigzags but they may also be impulses. This wave count sees minor waves 1, 3 and 5 as zigzags.

Leading diagonals are almost always followed by deep second wave corrections, sometimes deeper than the 0.618 Fibonacci ratio. Intermediate wave (2) is complete and 0.93 the length of intermediate wave (1).

Intermediate wave (2) of this new cycle degree trend may not move beyond the start of intermediate wave (1) below 1,131.09. Any breach of this price point by the smallest amount, even intra minute, would invalidate this wave count.

This analysis is published about 06:06 p.m. EST.


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