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A green candlestick on the daily Elliott wave chart indicates this last fifth wave will be extended, and will take its time. The targets remain the same. Upwards movement remains below the invalidation point and ended at the upper edge of the channel, as expected it should.

Summary: The first target for downwards movement to end is now able to be calculated at a low wave degree and has a higher probability, at 1,231. If price keeps dropping below this point the next target for it to end is at 1,221 – 1,218. Downwards movement may end in a few days time.

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Gold Elliott Wave Chart Daily 2014

The black (B)-(D) trend line is clearly breached. There are now three clear daily candlesticks below this black trend line and so I have confidence that primary wave 5 has begun.

In the last few trading days it is downwards days which have clearly higher volume. From a traditional technical analysis point of view this indicates the main trend is down.

At 956.97 primary wave 5 would reach equality in length with primary wave 1. Primary wave 3 is $12.54 short of 1.618 the length of primary wave 1, and equality between primary waves 5 and 1 would give a perfect Elliott relationship for this downwards movement.

However, when triangles take their time and move close to the apex of the triangle, as primary wave 4 has (looking at this on a weekly chart is clearer) the movement following the triangle is often shorter and weaker than expected. If the target at 956.97 is wrong it may be too low. In the first instance I expect it is extremely likely that primary wave 5 will move at least below the end of primary wave 3 at 1,180.40 to avoid a truncation. When intermediate waves (1) through to (4) within primary wave 5 are complete I will recalculate the target at intermediate degree because this would have a higher accuracy. I cannot do that yet; I can only calculate it at primary degree.

Minor wave 1 is a leading contracting diagonal. This was followed by a somewhat deep correction, a zigzag for minor wave 2.

Within minute wave v no second wave correction may move beyond its start above 1,296.60.

Draw a channel about minor wave 3 on the daily chart and copy it over carefully to the hourly chart: draw the first trend line from the highs labeled minute waves ii to iv, then place a parallel copy on the low labeled minute wave iii. Expect downwards movement for minute wave v to find support, and maybe end, at this lower pink trend line.

GOLD Elliott Wave Chart Hourly 2014

Upwards movement for Friday’s session found strong resistance at the upper edge of the green channel drawn around minute wave v. Draw this channel using Elliott’s second technique: draw the first trend line from the highs labelled minuette waves (ii) to (iv), then place a parallel copy on the low labelled minuette wave (iii). Expect further upwards corrections along the way down to find resistance at the upper edge of the channel. Because this is expected to be an extended fifth waves sometimes these can be quite strong for commodities. The lower edge of the channel may provide some support, but price may break through that support line after a while.

Because subminuette wave ii shows on the daily chart clearly as a green candlestick I will expect subminuette wave iv to do the same when it arrives. At 1,241 subminuette wave iii would reach 1.618 the length of subminuette wave i. This target should be met in about one or two days time.

Subminuette wave ii was a deep zigzag. When subminuette wave iv arrives I would expect it to be relatively shallow and sideways moving, most likely a flat, combination or triangle.

At 1,231 minuette wave (v) would reach 1.618 the length of minuette wave (iii). Because there is no Fibonacci ratio between minuette waves (iii) and (i) it is very likely that minuette wave (v) will exhibit a Fibonacci ratio to either of minuette waves (i) or (iii). This first higher target has the better probability.

If price keeps dropping through this first target, or if when it gets there the structure is incomplete, then the second lower probability target would be used.

At 1,218 minor wave 3 would reach 1.618 the length of minor wave 1. At 1,221 minute wave v within minor wave 3 would reach 1.618 the length of minute wave iii.

Both targets expect an extended fifth wave for minute wave v to complete minor wave 3, which is common for Gold and commodities. Both targets allow for minor wave 3 to end low enough below the end of minor wave 1 to allow for upwards movement for a following fourth wave correction which may not move back into minor wave 1 price territory.

At the hourly chart level if subminuette wave ii continues further (which is very unlikely, but possible) then it may not move beyond the start of subminuette wave i above 1,277.46.

This analysis is published about 11:12 p.m. EST.