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GOLD Elliott Wave Technical Analysis – 1st November, 2017

Price is now beginning to move higher, which is what the Elliott wave counts both expected.

Summary: Upwards movement for a third wave should begin now. The first target is at 1,294 where a small consolidation may unfold. The target for this upwards swing to end is at 1,308, in the first instance, and may be as high as 1,380 (but this looks less likely now).

Reduce risk at this time to only 1-3% of equity on any one trade. Always trade with stops.

New updates to this analysis are in bold.

Last monthly charts for the main wave count are here, another monthly alternate is here, and video is here.

Grand SuperCycle analysis is here.

The wave counts will be labelled first and second. Classic technical analysis will be used to determine which wave count looks to be more likely. In terms of Elliott wave structure the second wave count has a better fit and fewer problems.

FIRST ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly I 2017
Click chart to enlarge.

There are more than 23 possible corrective structures that B waves may take, and although cycle wave b still fits well at this stage as a triangle, it may still be another structure. This wave count looks at the possibility that it may be a double zigzag.

If cycle wave b is a double zigzag, then current upwards movement may be part of the second zigzag in the double, labelled primary wave Y.

The target remains the same.

Within intermediate wave (C), no second wave correction may move beyond the start of its first wave below 1,205.41. However, prior to invalidation, this wave count may be discarded if price breaks below the lower edge of the black Elliott channel. If this wave count is correct, then intermediate wave (C) should not break below the Elliott channel which contains the zigzag of primary wave Y upwards.

There are now three problems with this wave count which reduce its probability in terms of Elliott wave:

1. Cycle wave b is a double zigzag, but primary wave X within the double is deep and time consuming. While this is possible, it is much more common for X waves within double zigzags to be brief and shallow.

2. Intermediate wave (B) within the zigzag of primary wave Y is a double flat correction. These are extremely rare, even rarer than running flats. The rarity of this structure must further reduce the probability of this wave count.

3. Although intermediate wave (C) should be continuing so that primary wave Y ends substantially above the end of primary wave W, the duration and depth of minor wave 2 within it now looks to be too large at the weekly time frame.

DAILY CHART

Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

The analysis will focus on the structure of intermediate wave (C). To see details of all the bull movement for this year see daily charts here.

Intermediate wave (C) must be a five wave structure, either an impulse or an ending diagonal. It is unfolding as the more common impulse.

It is possible that minor waves 1 and now 2 may both be over. Minor wave 2 may have ended very close to the 0.618 Fibonacci ratio. If it continues lower, then minor wave 2 may not move beyond the start of minor wave 1 below 1,205.41.

Minor wave 1 lasted 44 days and minor wave 2 may have lasted 20 days, just one short of a Fibonacci 21.

It is of some concern now that minor wave 3 appears to be starting out rather slowly and that minute wave ii within it is now a very deep correction.This is somewhat unusual for a third wave and offers some support now to the second Elliott wave count. With StockCharts data showing a steady decline in volume as price rises, this concern is validated.

A base channel is added to minor waves 1 and 2. If this wave count is correct, then lower degree second wave corrections should find support at the lower edge of the base channel. Friday’s candlestick is below the base channel, which now reduces the probability of this wave count.

Minute wave ii may now be over as a double zigzag structure.

It is again of concern that upwards movement this week does not have support from volume. The start of a third wave up at two degrees should be a strong movement.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

If minute wave ii is over as a very deep double zigzag, then it may have lasted a Fibonacci eight days.

Because minute wave ii here is so deep, the appropriate Fibonacci ratio to use to calculate a target for minute wave iii is 2.618.

Minute wave iii may only subdivide as a five wave impulse upwards. Minuette waves (i) and (ii) may now be complete.

Minuette wave (iii) may only subdivide as a five wave impulse. Within minuette wave (iii), subminuette wave i may be complete and subminuette wave ii may be incomplete. Subminuette wave ii may not move beyond the start of subminuette wave i below 1,267.97.

A base channel is added now to minuette waves (i) and (ii). Along the way up, lower degree corrections should find very strong support at the lower edge of the base channel. Gold almost always behaves like this; breaches of its base channels do happen, but they are uncommon.

The next wave up for this wave count would now be expected to be a third wave at four degrees.

SECOND ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly I 2017
Click chart to enlarge.

It is still possible that cycle wave b is unfolding as a regular contracting or barrier triangle.

Within a triangle, one sub-wave should be a more complicated multiple, which may be primary wave C. This is the most common sub-wave of the triangle to subdivide into a multiple.

Intermediate wave (Y) now looks like a complete zigzag at the weekly chart level.

Primary wave D of a contracting triangle may not move beyond the end of primary wave B below 1,123.08. Contracting triangles are the most common variety.

Primary wave D of a barrier triangle should end about the same level as primary wave B at 1,123.08, so that the B-D trend line remains essentially flat. This involves some subjectivity; price may move slightly below 1,123.08 and the triangle wave count may remain valid. This is the only Elliott wave rule which is not black and white.

Finally, primary wave E of a contracting or barrier triangle may not move beyond the end of primary wave C above 1,295.65. Primary wave E would most likely fall short of the A-C trend line. But if it does not end there, then it can slightly overshoot that trend line.

Primary wave A lasted 31 weeks, primary wave B lasted 23 weeks, and primary wave C lasted 38 weeks.

The A-C trend line now has too weak a slope. At this stage, this is now a problem for this wave count, the upper A-C trend line no longer has such a typical look.

Within primary wave D, no part of the zigzag may move beyond its start above 1,357.09.

DAILY CHART

Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

This second wave count expects the new wave down may be deeper and longer lasting than the first wave count allows for. At this stage, in the middle of this downwards wave intermediate wave (B) looks incomplete.

A common length for triangle sub-waves is from 0.8 to 0.85 the length of the prior wave. Primary wave D would reach this range from 1,170 to 1,158.

If primary wave C is correctly labelled as a double zigzag, then primary wave D must be a single zigzag.

Within the single zigzag of primary wave D, intermediate wave (A) is labelled as a complete impulse.

Intermediate wave (A) lasted twenty days, just one short of a Fibonacci twenty-one. Intermediate wave (B) may be about the same duration, so that this wave count has good proportions, or it may be longer because B waves tend to be more complicated and time consuming.

So far intermediate wave (B) has lasted eighteen sessions. The next Fibonacci number in the sequence is twenty-one which would see it continue now for another three sessions.

At its conclusion intermediate wave (B) should have an obvious three wave look to it here on the daily chart.

Minor wave B may be complete here or close to completion as a double zigzag.

Minor wave A will subdivide as either a five wave impulse or a three wave zigzag. If it is seen as a zigzag, then the whole structure for intermediate wave (B) may be a flat correction, which would allow for minor wave B to move below the start of minor wave A at 1,260.72.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

Intermediate wave (B) may be a regular flat correction. Within intermediate wave (B), minor wave B has passed the minimum requirement of 0.90 the length of minor wave A. B waves within 0.90 to 1.05 the length of A waves indicate a regular flat correction. The most common length for C waves within regular flats is equality in length with the A wave.

Minor wave C would be extremely likely to make at least a slight new high above the end of minor wave A at 1,305.72 to avoid a truncation.

Both wave counts require a five wave structure upwards to complete. For this second wave count it would be labelled minor wave C.

So far, within minor wave C, minute waves i and now ii may be complete. This second wave count also expects a third wave up to now begin, but only at two degrees. Some increase in upwards momentum should be expected, and it should have support from volume.

The current small pullback, which is here labelled minuette wave (ii), looks incomplete. This hourly chart shows a slightly different way of labelling most recent movement. A small triangle may be completing for subminuette wave b within a zigzag downwards for minuette wave (ii).

When this second wave correction is complete, then an increase in upwards momentum would be expected.

Minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,267.97.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

What looks like a possible double bottom here with the last swing low three weeks ago is too small to be classified as a correct double bottom. The two troughs of a double bottom should be about 10% from the peak in between. Here, they are only 3.6% from the peak.

The long lower wick on the last completed weekly candlestick is bullish, but volume tells a different story as it is bearish.

On Balance Volume may again lead the way. Support may force a bounce here.

DAILY CHART

Gold Daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

Price is very clearly consolidating. Expect swings from support to resistance and back again. Use Stochastics in conjunction with support and resistance to signal when each swing ends. Be aware that trading a consolidating market is much more risky than trading a trending market, and reduce risk accordingly. Only experienced traders should consider trading the swings within a consolidation. Reduce risk to 1-3% of equity. Always trade with stops. Here, move stops to a little below support and above resistance to allow for overshoots; give the market room to move.

With Stochastics very close to oversold and price at support, an upwards swing may begin here or very soon. Look for resistance about 1,305 – 1,310. This also supports the second Elliott wave count.

Volume and On Balance Volume are today more clearly bullish giving some confidence that an upwards swing may be beginning now.

GDX DAILY CHART

Gold Daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

GDX broke below support four days ago, on a downwards day with support from volume. This looks still like a classic downwards breakout. It is common after breakouts for price to curve back and test support or resistance, and that looks like what is happening today.

The longer upper wick on today’s candlestick looks a little bearish. It looks like GDX may now begin to move down and away.

However, volume for this downwards movement is very light, so it is suspicious.

If price moves back above resistance at 22.75, then the consolidation zone may have to be widened. If this happens, then expect an upwards swing to next resistance about 23.95.

But the bottom line for GDX today is it is in a downwards trend. Assume GDX remains so while price remains below resistance at 22.75. With weakness still, traders should take profits or keep trailing stops tight.

Published @ 06:00 p.m. EST.

[Note: Analysis is public today for promotional purposes. Specific trading advice and comments will remain private for members only.]

Continue reading GOLD Elliott Wave Technical Analysis – 1st November, 2017

GOLD Elliott Wave Technical Analysis – 17th March, 2017

Sideways movement was expected for Friday. An inside day perfectly fits expectations.

Continue reading GOLD Elliott Wave Technical Analysis – 17th March, 2017

GOLD Elliott Wave Technical Analysis – 25th November, 2016

A short, sharp wave down to about 1,170 was expected for Friday’s session. This is what happened. Downwards movement reached 1,172.10 before reversing.

Continue reading GOLD Elliott Wave Technical Analysis – 25th November, 2016

GOLD Elliott Wave Technical Analysis – 4th October, 2016

Downwards movement invalidated both Elliott wave counts and broke below support.

Continue reading GOLD Elliott Wave Technical Analysis – 4th October, 2016

GOLD Elliott Wave Technical Analysis – 30th September, 2016

Again, upwards movement was expected for Friday’s session.

Price still remains above the invalidation point.

Continue reading GOLD Elliott Wave Technical Analysis – 30th September, 2016

GOLD Elliott Wave Technical Analysis – 2nd September, 2016

Upwards movement was expected for the last session. Both Elliott wave counts remain valid.

Summary: Look out now for surprises to the upside. In the short term, Monday may begin with a little upwards movement to 1,328. Thereafter, price should move lower for a correction to remain above 1,302.93. The target for the Elliott wave count for a third wave to end is now at 1,585.

New updates to this analysis are in bold.

Last weekly charts are here.

Grand SuperCycle analysis is here.

DAILY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

Primary waves 1 and 2 are complete. Thereafter, this wave count differs from the two alternates.

This main wave count will expect primary wave 3 to be longer than primary wave 1. Because this is very common, this is the main wave count and it expects the most common scenario is most likely. At this stage, the target for primary wave 3 is removed. A new target for intermediate wave (3) is calculated: at 1,585 intermediate wave (3) would reach 1.618 the length of intermediate wave (1).

Intermediate wave (2) may now be complete ending just below the 0.382 Fibonacci ratio of intermediate wave (1) and lasting 40 days. However, prior to a new high above 1,330.01, it must be accepted that intermediate wave (2) may yet move lower. Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,200.07

Primary wave 3 may only subdivide as an impulse.

At this stage, a new high above 1,330.01 could not be a continuation of minute wave iv, so at that stage minute wave iv and minor wave C would have to be over. A new high above 1,330.01 would provide strong confidence in a trend change and the resumption of the prior upwards trend.

Redraw the pink channel now about minute degree waves as shown using Elliott’s first technique: the first trend line from the ends of minute waves i to iii, then a parallel copy on the end of minute wave ii. Draw a channel about intermediate wave (2) using Elliott’s technique for a correction (blue lines). Price is finding support at the lower edge. The lower edge of this channel may stop price from falling further.

With this wave count expecting a third wave at two large degrees to begin, look out for surprises to the upside at this stage.

HOURLY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

Minor wave C is most likely to be over, which means intermediate wave (2) is most likely to be over.

Intermediate wave (3) may only subdivide as an impulse. Within intermediate wave (3), minor wave 1 should last a few days at least, so it would be incomplete.

Minor wave 1 would most likely unfold as an impulse, but it may also be a leading diagonal.

A five wave impulse upwards is close to completion. This may be minute wave i. Within minute wave i, so far minuette wave (iii) is 1.57 short of 1.618 the length of minuette wave (i). At 1,328 minuette wave (v) would reach equality in length with minuette wave (i).

When minute wave i is a complete five wave impulse, then draw a Fibonacci retracement along its length. The 0.382 and 0.618 Fibonacci ratios would be reasonable targets for the following correction of minute wave ii, with the 0.618 Fibonacci ratio favoured. Minute wave ii may offer a good entry opportunity to join the trend at an excellent price.

Although this chart has a short straight arrow up to the end of intermediate wave (3), this is an indication of overall direction for price only. Markets do not move in straight lines. There will be corrections along the way.

A new high above 1,330.01 would invalidate the alternate hourly wave count below and provide further reasonable confidence in this main wave count.

Intermediate wave (1) lasted 27 days and intermediate wave (2) lasted 40 days. Intermediate wave (3) may be reasonably expected to last longer than intermediate wave (1) in both time and price. A Fibonacci 55 days would be a first expectation.

No second wave correction may move beyond the start of its first wave below 1,302.93.

ALTERNATE HOURLY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

Both hourly wave counts today see minute wave iii over at the low for 30th of August.

Minute wave iv may be unfolding as an expanded flat correction. These are very common structures. Within minute wave iv, minuette wave (b) is a 1.65 length of minuette wave (a). This is longer than the common length of up to 1.38, but within the allowable convention of up to 2 times the length of minuette wave (a).

Within minuette wave (c), a final fifth wave up is required to complete the impulse. At 1,328 subminuette wave v would reach equality in length with subminuette wave i. The target is the same for both wave counts short term because the structure of a five wave impulse up is the same.

How low the following movement goes should indicate which wave count is correct. This alternate has a lower probability.

Minute wave iv may not move into minute wave i price territory. Any movement by any amount on any time frame above 1,330.01 would immediately invalidate this alternate wave count.

ALTERNATE DAILY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

It is possible that primary wave 3 is over and shorter than primary wave 1. Primary wave 3 shows stronger volume than primary wave 1 (see technical analysis weekly chart).

If primary wave 3 is over, then the current consolidation for Gold would be primary wave 4.

Primary wave 2 was a relatively shallow 0.35 expanded flat correction. Primary wave 4 may be unfolding as a deeper zigzag which would exhibit perfect alternation.

Primary wave 4 may not move into primary wave 1 price territory below 1,282.68.

Primary wave 5 would be limited to no longer than equality in length with primary wave 3, so that the core Elliott wave rule stating a third wave may not be the shortest is met. Primary wave 5 would have a limit at 1,477.77.

The hourly charts would be exactly the same except for the degree of labelling.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2016
Click chart to enlarge.

This week made an important new low, slightly below the prior swing low of 18th of July. Price thereafter bounced up strongly from support about 1,310 – 1,305. This weekly candlestick comes with lighter volume than last week.

To see what is happening here we need to look inside this week at daily volume.

The long lower wick of this weekly candlestick is bullish.

On Balance Volume is giving a bullish signal this week as it found support at the yellow trend line and has moved up and away from that line. OBV may find some resistance at the purple line.

RSI is not extreme. There is still room for price to fall or rise. There is no divergence between price and RSI at the weekly chart level to indicate weakness.

DAILY CHART

Gold Daily 2016
Click chart to enlarge.

Volume shows a steady increase all week, with Friday’s upwards day showing strongest volume. The rise in price for Friday was well supported by volume. This supports the main Elliott wave count; it is bullish.

Price has found support this week at the lower edge of the support zone about 1,305. The bounce up from there reinforces the strength of this support line.

On Balance Volume gave a bullish signal this week when it came down to touch the yellow support line and then moved up from there. The strength of this line is slightly reinforced. OBV is not up at the purple line which may offer resistance. This may initiate a reaction downwards, which is what both Elliott wave counts expect short term for Monday / Tuesday.

RSI is close to neutral. There is plenty of room for price to rise or fall. There is no divergence noted at the end of this week between price and RSI at the daily chart level to indicate any weakness.

ADX is still declining and the +DX and -DX lines are still whipsawing about each other. ADX indicates this market is not trending. This is a lagging indicator as it is based upon a 14 day average.

ATR for Friday has increased, but one day of increase is not enough to indicate a trend returning. Overall, ATR is still declining in agreement with ADX that this market is not yet trending. ATR is also a lagging indicator as it too is based upon a 14 day average.

Stochastics is returning from oversold. If the market is range bound, then the upwards swing should be expected to continue next week and only end when price finds resistance and Stochastics reaches overbought.

Bollinger Bands showed some small widening this week, but still are reasonably tightly contracted.

During the range bound period, which began back on 7th of July for Gold, it is still the two upwards days of 8th of July and 26th of August that have strongest volume. Volume is suggesting an upwards breakout is still more likely than downwards. This supports the Elliott wave count.

This analysis is published @ 07:48 p.m. EST.

[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]

Continue reading GOLD Elliott Wave Technical Analysis – 2nd September, 2016

GOLD Elliott Wave Technical Analysis – 30th June, 2016

Downwards movement was expected for the main hourly Elliott wave count, but this is not what happened. However, price remains below the invalidation point, so all three hourly wave counts remain valid.

Continue reading GOLD Elliott Wave Technical Analysis – 30th June, 2016

GOLD Elliott Wave Technical Analysis – 29th January, 2016

Downwards movement breached the invalidation point on the main hourly Elliott wave chart but not the alternate.

Continue reading GOLD Elliott Wave Technical Analysis – 29th January, 2016

GOLD Elliott Wave Technical Analysis – 19th January, 2016

Sideways movement remains above the invalidation point on the hourly chart.

The short term Elliott wave count is changed slightly. The longer term picture is the same.

Continue reading GOLD Elliott Wave Technical Analysis – 19th January, 2016

The Trend Is Your Friend

The flip side of the title to this post is “don’t trade against the trend”.

The fact that markets trend is why traders make profits. Price is not completely random. Price tends to move in trends.

Trends are often delineated by trend lines.

When price is consolidating it tends to move in whipsaws about a moving average with choppy overlapping sideways movements. Price tends to move from resistance to support and back again, but not in a straight line. Overshoots of resistance and support can also happen yet price can turn back into the consolidation zone. It is impossible to tell exactly when and where price will turn, so if trying to trade a consolidating market losses are inevitable. Mean reverting systems for trading during a consolidating market are suited for the most experienced and nimble of traders only, not at all for beginners or those with only a few years experience.

When price has been consolidating for a while, then horizontal lines can be drawn to show the upper and lower boundaries of the consolidation zone. It then becomes a waiting game. Waiting for a breakout. When price breaks above resistance or below support on a day with an increase in volume, then a breakout is indicated and the market has begun to trend again.

When price is trending it moves in a clear direction, usually finding support (an upwards trend) or resistance (a downwards trend) at a sloping trend line. The clear direction of price movement is what makes profit easier, so the trick is to identify a new trend early enough to allow for profit to be made and then to identify when it is over early enough to exit the trade with a profit. For less experienced traders, it is advised to wait for a clear trend to be evident and then to only trade in the direction of that trend. Profits should be relatively easy as long as the trend is not exhausted.

If staying with the trend is the easiest way to make a profit, then it makes sense to avoid trading when the market is not trending.

It is often the trades that a trader does NOT take which makes the difference between profit and loss. Cut losses by avoiding consolidating markets.

If there is only one lesson that new traders can learn which will improve trading performance, it is to only trade a clear trend in the direction of that trend.