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Yesterday’s price movement completed a small green doji. Thereafter price has turned lower to breach the green parallel channel on the hourly chart. This was expected for the main wave count and was required for confidence in a trend change.

The green channel is now clearly breached on the hourly chart. In just one more day it should also be breached on the daily chart. This will provide further confidence in a trend change. Final confidence will come with a clear breach of the pink channel on the daily chart.

Summary: The short term target for more downwards movement is 1,299. This may be met within another one to three trading days. On the way down upwards corrections should find resistance about the lower edge of the green channel.

This analysis is published about 04:25 p.m. EST. Click on charts to enlarge.

Gold Elliott Wave Chart Daily 2013

Gold is still within a large fourth wave correction at primary wave degree which is incomplete.

Primary wave 2 was a rare running flat. Primary wave 4 is unlikely to be a flat correction because it is likely to show structural alternation with primary wave 2.

The first upwards wave within primary wave 4 labeled here intermediate wave (W) subdivides as a three wave zigzag. Primary wave 4 cannot be an unfolding zigzag because the first wave within a zigzag, wave A, must subdivide as a five.

Primary wave 4 is unlikely to be completing as a double zigzag because intermediate wave (X) is a deep 99% correction of intermediate wave (W). Double zigzags commonly have shallow X waves because their purpose it to deepen a correction when the first zigzag does not move price deep enough.

Primary wave 4 is most likely to be completing as a double combination: zigzag – X – second structure. The second structure labeled intermediate wave (Y) may be either a flat or a triangle. For both these structures minor wave A must be a three, and is most likely to be a zigzag.

Minor wave A is now most likely a complete zigzag. When the pink channel drawn about it is clearly breached by a full daily candlestick below and not touching the lower trend line then we will have final trend channel confirmation of this trend change. While price remains within the channel we must accept the possibility that my analysis is wrong and we could see new highs.

There are more than thirteen possible corrective structures that minor wave B may take. Some of those possibilities, such as expanded flats or running triangles, may see an upwards correction within minor wave B which makes a new high above 1,345.52. Minor wave B may be a steep sharp zigzag downwards, or it may be a very choppy overlapping movement. When the first wave for minute wave a within it is complete then I can narrow down the possibilities for you.

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

GOLD Elliott Wave Chart Hourly 2013

A new low below 1,322.41 and a clear breach of the lower edge of the green channel on the hourly chart provides some confidence in this wave count. It is now more likely that minor wave A is finally over and minor wave B downwards has just begun. Depending upon risk appetite confidence may be assumed here, or only when the larger pink channel on the daily chart is clearly breached.

At this stage we have an incomplete 5-3-5 downwards. When the next five down labeled subminuette wave iii is complete then at that stage the number of alternate wave counts will increase.

At 1,299 subminuette wave iii would reach 1.618 the length of subminuette wave i. Subminuette wave iii must subdivide as a simple impulse.

Submicro wave (2) may not move beyond the start of submicro wave (1) above 1,333.02.

This next wave down at minor degree is a B wave. B waves are the most difficult of all waves to analyse and the most difficult to trade. The amount of variety in B waves is the greatest, and the number of alternates we shall have to work with in coming weeks will be greater.

Alternate Daily Wave Count – Triangle.

Gold Elliott Wave Chart Daily Alternate 2013

It is also possible that primary wave 4 may continue as a regular contracting (or barrier) triangle.

This wave count has a good probability. It does not diverge from the main wave count and it will not diverge for several weeks yet.

Triangles take up time and move price sideways. If primary wave 4 unfolds as a triangle then I would expect it to last months rather than weeks.