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Price has moved mostly sideways to complete a small red candlestick. The main and new alternate Elliott wave counts both remain valid.

Summary: I still favour the main wave count, but it requires a new low below 1,146.98 before I will have confidence in the target at 1,004. It expects to see a strong downwards movement unfold. Alternatively, a new high above 1,194.36 would indicate a third wave up may be underway, and the target for that is 1,224.

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Main Wave Count

Gold Elliott Wave Chart Daily 2014

Primary wave 4 is complete and primary wave 5 is unfolding. Primary wave 5 may only subdivide as an impulse or an ending diagonal. So far it looks most likely to be an impulse.

Within primary wave 5 intermediate wave (1) fits perfectly as an impulse. There is perfect alternation within intermediate wave (1): minor wave 2 is a deep zigzag lasting a Fibonacci five days and minor wave 4 is a shallow triangle lasting a Fibonacci eight days, 1.618 the duration of minor wave 2. Minor wave 3 is 9.65 longer than 1.618 the length of minor wave 1, and minor wave 5 is just 0.51 short of 0.618 the length of minor wave 1. I am confident this movement is one complete impulse.

Intermediate wave (2) is a relatively shallow 45% double zigzag correction.

Intermediate wave (1) lasted a Fibonacci 13 weeks. I would expect intermediate wave (3) to be extended in both price and duration. If it lasts a Fibonacci 21 weeks it would be 1.618 the duration of intermediate wave (1). So far intermediate wave (3) has just begun its fourth week.

Intermediate wave (3) may only subdivide as an impulse, and at 993 it would reach 1.618 the length of intermediate wave (1).

The target for primary wave 5 at this stage remains the same. At 956.97 it would reach equality in length with primary wave 1. However, if this target is wrong it may be too low. When intermediate waves (1) through to (4) within it are complete I will calculate the target at intermediate degree and if it changes it may move upwards. This is because waves following triangles tend to be more brief and weak than otherwise expected. A perfect example is on this chart: minor wave 5 to end intermediate wave (1) was particularly short and brief after the triangle of minor wave 4.

Intermediate wave (3) must move far enough below the end of intermediate wave (1) to allow room for upwards movement for intermediate wave (4) which may not move into intermediate wave (1) price territory.

At 1,004 minor wave 3 would reach 1.618 the length of minor wave 1.

Minor wave 2 may not move beyond the start of minor wave 1 above 1,255.40. However, if it does continue higher then it would most likely not break above the upper edge of the black base channel about intermediate waves (1) and (2).

GOLD Elliott Wave Chart 2014

Minor wave 2 still subdivides perfectly as a double flat correction, now lasting a Fibonacci eight days in total. Although minuette wave (c) looks like a three on the hourly chart it does subdivide perfectly as a five on the five minute chart.

I will have some confidence that minor wave 2 is over if price moves below 1,180.37. At that stage downwards movement may not be a continuation of subminuette wave iv because it may not move back into subminuette wave i price territory.

For full confidence in this trend change and the target at 1,004 for minor wave 3 I want to see a new low below 1,146.98. At that stage the alternate wave count below would be invalidated. Only at that stage would I be confident enough to call a trend change.

Minor wave 3 within intermediate wave (3) should show a very strong clear increase in downwards momentum.

If price keeps going up minuette wave (c) could be extending higher. However, the purpose of double flats is to take up time and move price sideways. They do not normally have a clear slope against the main trend. Already this structure is beginning to look slightly atypical, and if it extends higher it will reduce significantly in probability. If it did move higher I would expect upwards movement to find strong resistance at the upper edge of the base channel from the daily chart. If that upper black trend line is breached I would discard this main wave count in favour of the alternate below.

Alternate Wave Count

Gold Elliott Wave Chart Daily 2014

This alternate wave count sees intermediate wave (1) as complete in exactly the same way as the main wave count. Thereafter, I have moved the degree of labelling within the double zigzag for intermediate wave (2) down one degree. This may have been only minor wave A within a larger expanded flat correction for intermediate wave (2).

Downwards movement for minor wave B does subdivide as a three wave zigzag, and so this wave count is possible. However, the common length for a B wave within a flat correction is between 100% and 138% the length of the A wave. This B wave is 172% the length of minor wave A. This is certainly possible, but it does reduce the probability of this wave count to an alternate.

Minor wave C must subdivide as a five wave structure. On the hourly chart the subdivisions so far fit. At 1,224 within it minute wave iii would reach 1.618 the length of minute wave i.

Minor wave C would be extremely likely to move at least slightly above the end of minor wave A at 1,255.40 to avoid a truncation and a very rare running flat. It may take intermediate wave (2) up to reach the 0.618 Fibonacci ratio of intermediate wave (1) just below 1,281.

Intermediate wave (2) may not move beyond the start of intermediate wave (1) above 1,345.22. If this invalidation point is passed (and I am very confident it will not be yet) then that would indicate an end to primary wave 5 and a trend change at cycle degree.

Gold Elliott Wave Chart Daily 2014

So far within minor wave C minute waves i and now ii would be complete. Within minute wave iii no second wave correction may move beyond the start of its first wave below 1,146.98. If price moves below this point this alternate wave count would be discarded.

Within minute wave iii the next wave up for minuette wave (iii) should show a strong increase in upwards momentum.

If we see a new high above 1,194.36 within the next few hours this alternate wave count will increase in probability. At that stage I would expect more upwards movement, and I may swap this alternate wave count over to be my main wave count. I would look for an increase in upwards momentum, and I would look to see a five wave impulse unfolding upwards.

This analysis is published about 02:56 p.m. EST.