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Sideways movement completed a red doji candlestick for Friday’s session. The prior day’s high at 1,258.38 remains intact for now and the wave count remains the same.

Summary: A third wave down has most likely begun. The target is 1,206. Movement below 1,241.16 would provide full and final confirmation the third wave has begun.

This analysis is published about 10:50 p.m. EST. Click on charts to enlarge.

Gold Elliott Wave Chart Daily 2014

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.

Primary wave 4 is most likely to be completing as a double combination: zigzag – X – second structure. The second structure labeled intermediate wave (Y) is most likely to be a flat correction. Within the flat correction minor wave B must reach a minimum 90% the length of minor wave A at 1,201.98.

If downwards movement does not reach 1,201.98 or below then intermediate wave (Y) may not be a flat correction and may be a contracting triangle. I will keep this alternate possibility in mind as this next wave down unfolds. If it looks like a triangle may be forming I will again chart that possibility for you.

It remains possible that primary wave 4 in its entirety is a huge contracting triangle. This alternate idea is published at the end of this analysis daily.

Overall a double combination for primary wave 4 should take up time and move price sideways, and the second structure should end about the same level as the first at 1,434. Primary wave 4 may not move into primary wave 1 price territory. This wave count is invalidated with movement above 1,532.90.

Within intermediate wave (Y) minor wave B downwards is incomplete. It may be a single zigzag as labeled here. If it is a single zigzag then minute wave c is unfolding as a five wave impulse. Within the impulse minuette wave (ii) may not move beyond the start of minuette wave (i) at 1,293.47. At 1,178 minute wave c would reach equality in length with minute wave a.

I have drawn a channel about minor wave B downwards: draw the first trend line from the start of minute wave a to the end of minute wave b, then place a parallel copy upon the end of minute wave a. I will expect downward movement to find support at the lower end of this channel due to this being the most common place for minute wave c to end.

Within minor wave B downwards I have extended the triangle trend lines for minute wave b outwards. They cross over slightly beyond today’s candlestick. We may see a trend change today or tomorrow. This may be where the second wave correction ends and a third wave down begins.

GOLD Elliott Wave Chart Hourly 2014

Minuette wave (ii) is still most likely over at 1,258.38. At that point lasting 77 hours in comparison to minuette wave (i) lasting 101 hours, it is nicely in proportion. Within an impulse the corrective waves of two and four are normally less time consuming than the actionary waves of one, three and five.

Within minuette wave (iii) we may now have two overlapping first and second waves. This indicates a strong increase in downwards momentum may happen early next week, and may be as soon as Monday morning.

I have checked subdivisions on the five minute chart. Subminuette wave i subdivides perfectly as a five wave impulse, subminuette wave ii as an expanded flat. Micro wave 1 subdivides as a five wave impulse (with a truncated fifth wave) and micro wave 2 is most likely an incomplete zigzag. On the five minute chart there are five wave structures downwards and three wave structures upwards for the last two days, indicating the trend is down.

Movement below 1,241.16 would confirm that minuette wave (ii) is over and minuette wave (iii) has begun. At that stage I would have confidence in the target.

Micro wave 2 may not move beyond the start of micro wave 1 above 1,257.96.

Daily – Triangle.

Gold Elliott Wave Chart Daily Triangle 2014

It remains possible that primary wave 4 in its entirety is a huge regular contracting triangle.

So far one of the five subwaves of the triangle subdivides into a double zigzag. All the other four subwaves must then be simple corrections, and three of them must be single zigzags. The fourth may be another type of simple A-B-C correction, and most commonly it would also be a zigzag.

Intermediate wave (D) would most likely be incomplete for the triangle to have a typical look. Intermediate wave (D) may end between 1,233 and 1,213, 75% to 85% the length of intermediate wave (C), which in my experience is a typical wave length for a triangle subwave.

Intermediate wave (D) may not move beyond the end of intermediate wave (B) for a contracting triangle. For a barrier triangle intermediate wave (D) may end about the same level as intermediate wave (B) as long as the B-D trend line remains essentially flat. In practice this means that intermediate wave (D) may end very slightly below the end of intermediate wave (B). This lower invalidation point is not black and white. This is the only Elliott wave rule which is not black and white.

Intermediate wave (E) may not move beyond the end of intermediate wave (C) for either a contracting or barrier triangle.