Tag Archives: elliott wave

The Trading Room – 15th February, 2017

Today’s Trading Room looks at Natural Gas and USDJPY.

To learn what the Trading Room is about see first Trading Room analysis here.

Trading Room will focus on classic technical analysis. Elliott wave analysis will be for support and for targets / invalidation points.

Natural Gas – NGAS

TECHNICAL ANALYSIS

NGAS Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

In the mid term, there is a new downwards trend for Gas. Use the Magee trend line for resistance.

In the short term, price may bounce up here from the 200 day moving average. The slight decline in volume for the last two days, along with small range days, looks like bears are temporarily exhausted. Expect a bounce as fairly likely.

This chart looks very bearish.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

ELLIOTT WAVE ANALYSIS

WEEKLY CHART

NGAS Chart Weekly 2017
Click chart to enlarge.

The trend channel about cycle wave b has been breached now at the weekly and daily chart level. This may offer some confidence in a trend change.

DAILY CHART

NGAS Chart Daily 2017
Click chart to enlarge.

Cycle wave b may be complete. A cycle wave c down may be in the early stages. This wave should last one to several years if the wave count is correct. The lower edge of the channel about cycle wave b is now breached by two daily candlesticks.

Look for bounces to find resistance at the Magee trend line.

I do have an alternate wave count, but it too is bearish at this time. Publication of it would add nothing to the analysis. If any member wants it, then please email me and I’ll send it to you.

USDJPY

TECHNICAL ANALYSIS

USDJPY Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Price has moved upwards, as expected, since last publication of analysis of this pair. There is now a full daily candlestick above the blue line, which previously provided resistance and may now provide support.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

ELLIOTT WAVE ANALYSIS

USDJPY Chart Daily 2017
Click chart to enlarge.

This market is behaving as expected so far. Elliott wave targets may be used as profit targets.

DISCLAIMER

As always, it is essential that anyone using this analysis for trading advice manages risk carefully. Follow my two Golden Rules:

1. Always use a stop.

2. Never invest more than 1-5% of equity on any one trade.

Trading is about probabilities, not certainties. Failure to follow my two Golden Rules of trading indicates failure to manage risk.

Accept that this analysis may be wrong. It is impossible for any analyst to predict with certainty what a market will do next.

This analysis is published @ 12:35 a.m. EST.

The Trading Room – 13th February, 2017

Today’s Trading Room looks at USDJPY, USD Index, NZDUSD, EURUSD and US Oil (by popular demand).

To learn what the Trading Room is about see last Trading Room analysis here.

USDJPY

TECHNICAL ANALYSIS

USDJPY Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

For the long term, assume the trend remains up until proven otherwise. The long term 200 day moving average still has a positive slope, and the short and mid term averages are still above it.

For the mid term, price has seen a relatively deep pullback. The question will be: Is this over and will the upwards trend resume?

Price is at support just above 111 (horizontal support and resistance lines are drawn after looking back 3 years). Resistance is just above 114 and next about 116.

There is some bullish divergence with RSI, but RSI did not reach oversold for this pullback.

The risk here is that the pullback may move lower and RSI may develop double divergence with price before price turns up.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

ELLIOTT WAVE ANALYSIS

USDJPY Chart Daily 2017
Click chart to enlarge.

This wave count has excellent alternation and Fibonacci ratios. There are also some close Fibonacci durations for waves.

If intermediate wave (4) moves lower, it should find strong support at the lower edge of the best fit channel. Double zigzags are reasonably common structures. Triple zigzags (labelled W-X-Y-X-Z) are very rare. If intermediate (4) is correctly labelled as a double zigzag, then the probability that it is over here is very high.

VOLUME ANALYSIS

USDJPY Chart Daily 2017
Click chart to enlarge.

Volume increased during the middle portion of the pullback, and now at the last low volume declined as price fell; the market fell of its own weight. This points to a tired trend. Price certainly could move lower here, but the probability of a low in place has slightly increased.

On Balance Volume is at support. If it breaks below the yellow line, that would be a bearish signal.

USD INDEX

TECHNICAL ANALYSIS

USD Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Price has moved upwards since last analysis of this market.

The long term trend should be assumed to remain upwards until proven otherwise. This downwards movement should be assumed to be a pullback within a larger upwards trend.

Looking back at price behaviour in the last upwards wave from the left of this chart: price starts out slowly with choppy movement, generally trending, and it is not until the middle of the movement that Bollinger Bands widen and ATR shows a good increase. Then the trend quickly became extreme, yet price continued upwards while ADX steadily declined from about 45. So trends for this market can remain very extreme for long periods of time.

The current situation looks similar to that back in September 2016: ATR is declining as price moves up, Bollinger Bands are contracting, ADX is low and below both directional lines, and RSI is neutral. In the current day, Stochastics is also returning from oversold and exhibits single bullish divergence at last lows.

It is looking like USD index may be in the very early stages of the next wave upwards.

Unfortunately, neither BarChart nor Stockcharts provide volume data for the USD Index, so no volume analysis can be done.

ELLIOTT WAVE ANALYSIS

USD Chart Daily 2017
Click chart to enlarge.

The structure of intermediate wave (3) and of primary wave 5 is incomplete. Price has found support and bounced up off the best fit channel. The short term yellow resistance line is breached. It is looking increasingly likely that USD index is beginning the next wave up.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

NZDUSD

TECHNICAL ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Since last analysis of this pair, which was very bearish, price has fallen and closed below the short term Fibonacci 13 day moving average. The long, red daily candlesticks look bearish, and the longer upper wicks on the first two are bearish.

RSI is now neutral and Stochastics is returning from overbought. There is room for this wave down to continue.

ADX was extreme. It has a long way down to go before it would again indicate a trend.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge.

The green support line has been fully breached.

The structure here is seen as a leading expanding diagonal. The fifth wave of minute wave v must be longer than minute wave iii to meet the rule regarding wave lengths for expanding diagonals. This gives the minimum target calculation.

A trend line is drawn about On Balance Volume, which has been tested at least three times before and is long held. It is now breached and OBV is coming up for a back test of resistance. If this line holds, it would be strengthened and more confidence would be had that price has turned.

The three red daily candlesticks in last week saw increasing volume. This supports downwards movement and adds confidence in a trend change here.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

EURUSD

TECHNICAL ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Support and resistance lines are added this week. Look for support next at 1.055.

This pair is not as clearly bearish as NZDUSD, but it does look like they may be turning downwards together. Look out for Bollinger Bands to widen as volatility returns to this market.

Stochastics is returning from overbought after exhibiting divergence there. If it reaches oversold while price reaches support, then this market will be carefully analysed for any weakness in downwards movement.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge.

On Balance Volume remains bearish. A back test of resistance for both yellow trend lines has happened and OBV has turned down from both giving bearish signals.

The best fit channel has been breached. A one day throw back occurred right after the breach, but price may still curve up and around for a longer back test of resistance. That is the risk here to short positions.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

US Oil

TECHNICAL ANALYSIS

USOil Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

US Oil entered a consolidation back in December 2016. Since then price has been fluctuating with typically choppy movement from resistance to support and back again. Resistance is about 54.15 to 54.35 and support is about 52.15 to as low as 50.70. During this long consolidation, it is now two upwards days that have strongest volume suggesting an upwards breakout is more likely than downwards.

On Balance Volume has last week given a strong bullish signal.

Prepare for an upwards breakout. This may happen this week.

A classic analysis target would expect price to travel at least the distance of the widest part of the consolidation after a breakout. That would expect a movement of about 4.53.

ELLIOTT WAVE ANALYSIS

USOil Chart Daily 2017
Click chart to enlarge.

The Elliott wave analysis is overall very bearish for US Oil. This is an alternate wave count that is published here because it aligns with the classic technical analysis today.

This wave count expects essentially that any upwards breakout may be false and short lived.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

DISCLAIMER

As always, it is essential that anyone using this analysis for trading advice manages risk carefully. Follow my two Golden Rules:

1. Always use a stop.

2. Never invest more than 1-5% of equity on any one trade.

Trading is about probabilities, not certainties. Failure to follow my two Golden Rules of trading indicates failure to manage risk.

Accept that this analysis may be wrong. It is impossible for any analyst to predict with certainty what a market will do next.

This analysis is published @ 06:27 p.m. EST on 12th February, 2017.

GOLD Elliott Wave Technical Analysis – 9th February, 2017

A breach of the trend channel and a new low below 1,227.82 has invalidated the main wave count and confirmed an alternate.

Continue reading GOLD Elliott Wave Technical Analysis – 9th February, 2017

The Trading Room – 8th February, 2017

Introduction:

The Trading Room is a new idea that I want to test and develop over the next few months.

I find myself spending a lot of time writing and publishing analysis of Gold and the S&P500 (over at Elliott Wave Stock Market) when those markets are quiet and range bound and offer no good trading opportunities. This focus on inactive markets takes focus away from markets that are trending and do offer good trading opportunities.

What if the focus was on finding good trading opportunities over a range of markets rather than daily analysis of specific markets? What if the Trading Room can be the platform for publishing these good trading opportunities?

Therefore, this Trading Room approach will look over a range of markets to identify any possible trading set ups which may unfold now or over the next few days, and the focus will be on trading set ups and not on teaching and learning Elliott wave.

Analysis will be brief and to the point.

As always, it is essential that anyone using this analysis for trading advice manages risk carefully. Follow my two Golden Rules:

1. Always use a stop.

2. Never invest more than 1-5% of equity on any one trade.

Trading is about probabilities, not certainties. Failure to follow my two Golden Rules of trading indicates failure to manage risk.

Today’s Trading Room focuses on NZDUSD, EURUSD, USD, and GDX:

EURUSD

TECHNICAL ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge.

So far upwards movement should be assumed to be a counter trend movement, until proven otherwise. The prior wave down put ADX into extreme and upwards movement from the 3rd of January has brought ADX back down from extreme. There is again room for a trend to develop.

Single divergence with Stochastics on its own is not enough to indicate a high in place. A breach of a support line should be seen before entering short.

Stockcharts do not offer volume data for currencies, so this is analysed below with BarChart data.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge.

The best fit channel is slightly adjusted to be more conservative than the last published chart for EURUSD. If price can print a full daily candlestick below the lower edge of the yellow channel, that would offer further confidence in a trend change. When that trend line is breached, then it should offer resistance.

Stops may be set a little above the trend line offering a low risk high reward opportunity. Do not set stops too close to the line; allow the market room to move. Sometimes trend lines are overshot and this trend line is not perfect.

On Balance Volume has confidently breached a horizontal support line which offers strong technical significance. A retest of resistance at that line shows it holds. This is a strong bearish signal.

NZDUSD

TECHNICAL ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge.

Classic technical analysis of this pair is very bearish. The long upper wick on this last daily candlestick is bearish. This trend is extreme; it will end sooner rather than later.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge.

On Balance Volume has no trend line. Any trend line drawn would have too steep a slope to have reasonable technical significance.

If an expanding diagonal is unfolding, then minute iv must be either over now or very close indeed. There is almost no room left for it to move.

I have been analysing NZDUSD (because I’m a Kiwi) for years using Elliott wave and I will note that NZDUSD rarely offers good looking Elliott wave structures. Therefore, I place more weight in classic analysis of this pair than Elliott wave analysis. The Elliott wave analysis is supplementary.

I will wait for the green support line to be fully breached before going short here.

USD INDEX

TECHNICAL ANALYSIS

USD Chart Daily 2017
Click chart to enlarge.

There is not enough bullish indication here to go long yet. Upwards movement on this chart is a clear trend and downwards movement is choppy and overlapping, so downwards movement looks more like a counter trend movement. If that conclusion is correct, then USD should break out upwards.

The larger trend at the monthly chart level remains up and the 200 day moving average still has a positive slope.

ELLIOTT WAVE ANALYSIS

USD Chart Daily 2017
Click chart to enlarge.

Neither Stockcharts nor BarChart have volume data.

The short term yellow resistance line has been breached. However, the long upper wicks on the last two daily candlesticks gives some cause for concern.

Price may be bouncing up from the lower edge of the best fit channel. With another upwards day moving further away from the trend line, a long position may be entered. A stop may be set just below the last low.

GDX

TECHNICAL ANALYSIS

GDX Chart Daily 2017
Click chart to enlarge.

Next resistance is at 26.0.

This chart is provided today mostly for members of Elliott Wave Gold and not because I see a trading set up here, because I don’t. (That doesn’t mean one does not exist, only that I don’t see it today).

Going long here risks entering at the end of the trend. ADX is nearing extreme and price has closed above the upper edge of Bollinger Bands now for the last four sessions.

Going short here is trying to pick a top. Before going short at least two of the following should be seen: a bearish candlestick pattern, a break of support by On Balance Volume, divergence with price from RSI while overbought, price to move below the short term 13 day moving average.

This analysis is published @ 02:59 a.m. EST.

GOLD Elliott Wave Technical Analysis – 6th February, 2017

Another upwards day fits the second hourly Elliott wave count. Price is now just above the target range, which was 1,219.11 to 1,233.43.

Continue reading GOLD Elliott Wave Technical Analysis – 6th February, 2017

GOLD Elliott Wave Technical Analysis – 22nd December, 2016

Another small inside day fits both Elliott wave counts, but price behaviour is pointing to one scenario more strongly than the other.

Continue reading GOLD Elliott Wave Technical Analysis – 22nd December, 2016

GOLD Elliott Wave Technical Analysis – 19th December, 2016

A small upwards day fits all four Elliott wave counts. Price behaviour is now pointing to which wave count looks most likely.

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

GOLD Elliott Wave Technical Analysis – 21st November, 2016

Last analysis expected upwards movement to begin the new week. So far this is what has happened.

Summary: Upwards movement is expected from here. The target at 1,533 may be met in about six months time. There is divergence with price and Stochastics and RSI indicating bears are exhausted. If this view is wrong today, then Gold may make one final new low to a target at 1,203 before turning. A new high above 1,221.62 would add confidence in a trend change.

New updates to this analysis are in bold.

Grand SuperCycle analysis is here.

Last monthly and weekly charts are here.

DAILY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

The larger structure of primary wave X may be either a double zigzag or a double combination. The second structure in this double for primary wave Y may be either a zigzag (for a double zigzag) or a flat or a triangle (for a double combination).

It is my judgement at this stage that it is more likely primary wave X will be a double zigzag due to the relatively shallow correction of intermediate wave (X). Although intermediate wave (X) is deep at 0.71 the length of intermediate wave (W), this is comfortably less than the 0.9 minimum requirement for a flat correction. Within combinations the X wave is most often very deep and looks like a B wave within a flat.

However, there is no minimum nor maximum requirement for X waves within combinations, so both a double zigzag and double combination must be understood to be possible. A double zigzag is more likely and that is how this analysis shall proceed.

Within the second structure, minor wave A should be a five wave structure. This now looks complete.

Minor wave B found resistance at the lower edge of the wide parallel channel about primary wave X. Minor wave C may now be complete at the hourly chart level. Minor wave C has no Fibonacci ratio to minor wave A. Intermediate wave (Y) is just 0.02 longer than equality in length with intermediate wave (W).

At 1,533 primary wave Y would reach equality in length with primary wave W.

Primary wave W lasted seven months. Primary wave Y may be expected to be about even in duration.

HOURLY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

Minor wave B completed as a regular contracting triangle. Gold often exhibits surprisingly short waves out of its triangles.

Minor wave C has moved slightly below the end of minor wave A, avoiding a truncation. The structure now looks complete at the hourly chart level.

Within minor wave C, there are no adequate Fibonacci ratios between minute waves i, iii and v.

Within the new upwards movement, the spike labelled subminuette wave i may disappear from BarChart data tomorrow. It is not noticed on other Gold data feeds.

Intermediate wave (A) should subdivide as a five wave structure if cycle wave a is a double zigzag. Within intermediate wave (A), the upcoming correction for minor wave 2 may not move beyond its start below 1,204.05.

When there is a clear five up on the hourly chart, then more confidence may be had in this wave count.

A new high above 1,221.62 would add confidence. At that stage, the second hourly chart below would be invalidated.

SECOND HOURLY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

What if minor wave B was not a triangle but completed as a zigzag? Minor wave C may have begun earlier.

Minor wave C must complete as a five wave structure. It may need on final new low to end minute wave v within it.

Within minor wave C, there is alternation between the zigzag of minute wave ii and the combination of minute wave iv.

At 1,203 minute wave v would reach 1.618 the length of minute wave i. There is no Fibonacci ratio between minute waves i and iii, so a ratio for minute wave v is likely.

Minute wave iv may not move into minute wave i price territory above 1,221.62.

While this wave count is entirely possible, it is judged to have a lower probability than the first hourly chart today.

ALTERNATE DAILY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

This alternate wave count expects that the large upwards zigzag from the low of 1,046 in December 2015 to the last high of 1,374 in July 2016 is a complete correction. The trend is still down; Gold is still in a bear market.

If there has been a cycle degree trend change at the high labelled cycle wave b, then the new wave down must begin with a five wave structure. At this stage, there looks to be too much overlapping for an impulse, so a leading diagonal is considered.

Within leading diagonals, sub-waves 2 and 4 must subdivide as zigzags. Sub-waves 1, 3 and 5 are most commonly zigzags but sometimes may also appear to be impulses.

Within this structure, all sub-waves subdivide as zigzags. This wave count meets all Elliott wave rules. This diagonal looks correct.

Primary wave 1 lasted 94 days. Primary wave 2 may initially be expected to last about a Fibonacci 55 or 89 days. It should be a big three wave structure.

At this stage, there is no divergence in expected direction between this alternate and the main wave count. The structure of upwards movement, if it is clearly a three or five, may assist to tell us which wave count is correct in coming weeks. For now this alternate must be judged to have a low probability due to the problems outlined. It is published to consider all possibilities.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Last week completes with a smaller range and a substantial decline in volume. The fall in price is not supported by volume, so it is suspicious. It looks like bears are tired.

Price may find support here about 1,200.

On Balance Volume has come down to almost touch the yellow support line. There is a very little room for more downwards movement. This line should be expected to provide support and assist to halt the fall in price either here or very soon.

RSI is not extreme and does not exhibit divergence with price. There is room still for price to fall further.

DAILY CHART

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

A small upwards day with higher high and a higher low has moved price higher. The upper wick of today’s candlestick is relatively long and the real body is small. This is not a strong upwards day. Volume is light; the rise in price today did not have support from volume. This candlestick looks like a small counter trend correction.

Sometimes Gold’s new waves do begin with some hesitancy. However, at this stage, today’s candlestick favours the second hourly chart which expects Gold to make one more slight new low before turning.

There are no support lines at the daily chart level for On Balance Volume to help stop a fall in price here.

There is still mid term divergence between price and RSI and Stochcastics at the two lows of the 7th of October and the 18th of November. This is regular bullish divergence and indicates bears are exhausted.

ADX has slightly increased further today. It still indicates a downwards trend is in place. This is a lagging indicator though as it is based upon a 14 day average.

If there is a downwards trend, then it is showing some signs of weakness; ATR is declining.

Bollinger Bands continue to widen though indicating a trending market.

The Elliott wave count here is indicating a trend change before these indicators. If the main Elliott wave count is wrong, then the second hourly chart may be right and Gold may make one more low before turning.

This analysis is published @ 09:02 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 – 21st November, 2016

GOLD Elliott Wave Technical Analysis – 2nd November, 2016

Yesterday’s Elliott wave analysis expected upwards movement from Gold.

Price has moved higher as expected.

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

GOLD Elliott Wave Technical Analysis – 21st September, 2016

Upwards movement was expected.

Continue reading GOLD Elliott Wave Technical Analysis – 21st September, 2016

GOLD Elliott Wave Technical Analysis – 29th August, 2016

All three daily Elliott wave counts remain valid.

The invalidation / confirmation point may now be moved lower today.

Summary: Some more downwards movement next week looks most likely, to about 1,279. If this target is wrong, it may be a little too low. In the short term, a new high now above 1,330.01 would be confirmation that the correction is likely over and the next wave up has begun.

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 1,582 primary wave 3 would reach 1.618 the length of primary wave 1.

Only intermediate wave (1) so far is complete within primary wave 3. Intermediate wave (2) may be close to completion. It may find support at the lower edge of the base channel drawn about primary waves 1 and 2. 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.

Minute wave iv may not move into minute wave i price territory above 1,330.01. If price moves above 1,330.01 in the short term, then it may also be possible that minute wave iii is not over. No second wave correction within minute wave iii may move beyond the start of its first wave above 1,356.85. A new high above 1,356.85 would invalidated any continuation of minute wave iii and provide further confidence to the alternate wave count.

At 1,279 minor wave C would reach 1.618 the length of minor wave A. Price may end downwards movement when it finds support at the lower edge of the maroon base channel drawn about primary waves 1 and 2.

Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,200.07.

Primary wave 2 lasted 56 days (one more than a Fibonacci 55). So far intermediate wave (2) is more brief in duration. It has lasted 38 days and may be just a few days away from completion.

Draw a small channel about minor wave C, using Elliott’s technique, and copy it over to the hourly chart.

HOURLY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

Minor wave C must subdivide as a five wave structure. This wave count would be confirmed with a new low below 1,310.84.

Minor wave C still needs more downwards movement. Within minor wave C, minute wave iii is now complete. Minute wave ii was a deep zigzag, so to exhibit alternation minute wave iv may be a more shallow sideways structure and would most likely be a combination, flat or triangle. Minute wave iv may not move into minute wave i price territory above 1,330.01.

When minute wave iv is over, then the target may be calculated at minute degree also. At that stage, it may change or widen to a zone. If it changes, it may be moved upwards.

ALTERNATE DAILY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

The duration of minute wave ii now gives this wave count the wrong look. Lower degree second waves should be more brief in duration than second waves of a higher degree. Here, minute wave ii has lasted 19 days, minor wave 2 lasted 11 days, and intermediate wave (2) lasted 6 days.

At 1,437 intermediate wave (3) would reach equality in length with intermediate wave (1). At 1,552 intermediate wave (3) would reach 1.618 the length of intermediate wave (1).

Minute wave ii may not move beyond the start of minute wave i below 1,310.84.

A new high above 1,356.85 would add further confidence to this wave count. At that stage, alternate ideas for the main wave count would be invalidated.

ALTERNATE HOURLY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

A final fifth wave down would still be required for this alternate wave count. Upwards movement for Friday’s session will not subdivide as a five; it fits only as a three because of the deep spike labelled sub micro wave (B).

Friday’s session would have to be another fourth wave correction for this alternate.

After a slight new low, then this alternate wave count would expect upwards movement.

A new high above 1,339.48 is required for confidence in this wave count. At that stage, a third wave up at four degrees should be expected to be in the very early stages.

ALTERNATE III 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 momentum and 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 of 174.84.

This wave count expects more downwards movement to complete a five wave impulse for intermediate wave (C) in the same way as the main wave count expects a five wave impulse down to complete minor wave C. Only the degree of labelling differs; this wave count is one degree higher.

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

It is also possible that primary wave 4 may be a regular contracting triangle. If sideways movement continues in an ever decreasing range, then that idea would be published. At this stage, a zigzag looks more likely because the subdivisions have a slightly better fit.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2016
Click chart to enlarge.

A strong downwards week with an increase in volume supports the main and alternate III wave counts. Overall, volume is still declining and price remains range bound.

The prior two green weekly candlesticks had long upper shadows which was bearish.

Price may find some support about 1,310.

On Balance Volume at the end of last week has come down to find support at the purple trend line. This may help to stop price falling much further.

RSI is not extreme. There is some hidden bullish divergence with price and RSI: RSI has made a lower low below the low of 25th of July but price has made a higher low. This indicates some weakness to this downwards movement. It is more likely to be a smaller correction than a sustainable trend.

DAILY CHART

Gold Daily 2016
Click chart to enlarge.

Overall, price remains range bound with resistance about 1,375 and support about 1,310 – 1,305. This range bound period began back on 7th of July. During this range bound period, it is the two upwards days of 8th of July and 26th of August which have strongest volume suggesting an upwards breakout is more likely than downwards. This supports all three Elliott wave counts.

The long lower wick of today’s candlestick is bullish as is the colour. However, the decline in volume is bearish; this upwards movement for Monday is not supported by volume, so it is more likely a counter trend movement (within a small downwards swing within the larger consolidation) than the start of a more sustainable upwards swing.

The 55 day moving average may provide some support here.

On Balance Volume may find resistance at the purple line. This may assist to halt the rise in price. A break above the purple line would be a reasonably strong bullish signal.

RSI is not extreme. There is room for price to rise or fall. There is no divergence today between price and RSI to indicate weakness.

ADX continues to decline and the +DX and -DX lines are whipsawing about each other. ADX indicates this market is not trending. ATR agrees as it too continues overall to decline.

Stochastics is oversold. Price has not yet reached support at 1,310 though, so a little more downwards movement from price may be expected before this downwards swing is over. This approach expects the same movement next as the main Elliott wave count.

Bollinger Bands are widening now for three days in a row. A trend may be beginning to return. If it is, then it would be down. However, this contradicts ADX and ATR.

Overall, the decline in volume for Monday suggests a little more downwards movement ahead for price to find support about 1,310 – 1,305 to end this downwards swing.

This analysis is published @ 09:16 p.m. EST.

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