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The triangle ended but the thrust out of it was down, not up. The hourly Elliott wave count was invalidated but the Elliott wave count at the daily chart remains valid.

Summary: Overall the trend remains up. In the short term a new high above 1,193.99 would provide confidence in the short term target at 1,226. Alternatively, a new low below 1,185.79 would indicate more downwards movement to 1,176.14 but not below 1,175.18.

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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 an incomplete expanded flat correction. Within it minor wave A is a double zigzag. The downwards wave labelled minor wave B has a corrective count of seven and subdivides perfectly as a zigzag. Minor wave B is a 172% correction of minor wave A. This is longer than the maximum common length for a B wave within a flat correction at 138%, but within the allowable range of less than twice the length of minor wave A. Minor wave C may not exhibit a Fibonacci ratio to minor wave A, and I think the target for it to end would best be calculated at minute degree. At this stage I would expect intermediate wave (2) to end close to the 0.618 Fibonacci ratio of intermediate wave (1) just below 1,281.

Intermediate wave (1) lasted a Fibonacci 13 weeks. So far intermediate wave (2) has just begun its seventh week. I will expect it may continue for another two weeks at least to total a Fibonacci eight, and be 0.618 the duration of intermediate wave (1). Alternatively, intermediate wave (2) may last a total Fibonacci 13 weeks equalling the duration 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 (2) may not move beyond the start of intermediate wave (1) above 1,345.22. I have confidence this price point will not be passed because the structure of primary wave 5 is incomplete because downwards movement from the end of the triangle of primary wave 4 does not fit as either a complete impulse nor an ending diagonal.

To see a prior example of an expanded flat correction for Gold on the daily chart, and an explanation of this structure, go here.

*Note: I am aware (thank you to members) that other Elliott wave analysts are calling now for the end of primary wave 5 at the low at 1,131. I am struggling to see how this downwards movement fits as a five wave impulse: I would label the second wave within it (labelled minor wave 2) intermediate wave (1), and the fourth wave intermediate wave (4) (labelled as a double zigzag for minor wave A). Thus a complete impulse down would have a second wave as a single zigzag and a fourth wave as a double zigzag, which would have inadequate alternation. Finally, the final fifth wave down would be where I have minor wave B within intermediate wave (2). This downwards wave has a cursory count of seven, and I do not think it subdivides as well as an impulse as it does as a zigzag. If any members come across a wave count showing possible subdivisions of a complete primary wave 5 I would be very curious to see it.

Main Hourly Wave Count

GOLD Elliott Wave Chart 2014

The short sharp thrust out of the triangle was expected to be upwards, but this is not what happened. The triangle completed and the sharp thrust out of it was downwards. My mistake was incorrectly identifying where the triangle began, and allowing for a very rare nine wave triangle to be unfolding.

This illustrates the difficulty with triangles; they are very hard to identify correctly.

There is a triangle in there but it is one degree lower. This is supported by MACD hovering about the zero line while the triangle unfolds.

Minuette wave (iii) upwards must move beyond the end of minuette wave (i) above 1,204.77. Within minuette wave (iii) at 1,226 subminuette wave c would reach 1.618 the length of subminuette wave a. This target must be recalculated if subminuette wave b continues lower, which is an outside possibility.

Within leading diagonals the first, third and fifth waves most commonly subdivide into zigzags. Sometimes they may be impulses. Diagonals are the only structure where you will see a third wave labelled as anything other than an impulse for this reason. Within all diagonals the second and fourth waves must subdivide as zigzags, and are most commonly between 0.66 to 0.81 the length of the prior wave.

For this diagonal minuette wave (ii) is only 0.4 the length of minuette wave (i), which slightly reduces the probability of this structure. However, there is a perfect example of a leading contracting diagonal on the daily chart, minor wave 1 within intermediate wave (1). Within that leading contracting diagonal its second wave was just 0.42 of its first wave, and its fourth wave was 0.66 of its third wave. The common length is just that, common. It is a guideline and not a rule. The structure is more important.

Within minuette wave (iii) subminuette wave b is a regular flat correction. Micro wave B is a 97% correction of micro wave A at its end, but micro wave C has failed to move below the end of micro wave A, and is truncated. This truncation does not mean this structure is a rare running flat, because although part of micro wave B moves beyond the start of micro wave A, it is the end of micro wave B which determines what type of flat correction is unfolding and the end does not move beyond the start of micro wave A. The truncation of micro wave C does reduce the probability that this structure is complete though, and so if the first invalidation point at 1,185.79 is breached I would expect that this may be micro wave C continuing lower. If that happens I would use the alternate below.

Movement above 1,193.99 would invalidate the alternate below and provide confidence in this main wave count and the targets.

Alternate Hourly Wave Count

GOLD Elliott Wave Chart Alternate 2014

Only if price invalidates the main hourly wave count with a new low below 1,185.79 would I use this alternate.

Although the main wave count sees a reasonable truncation if subminuette wave b is complete, I still think it is more likely. If we see subminuette wave b as incomplete then within it micro wave C requires a reasonable amount of downwards movement to complete as a five wave structure, and I am not sure that it can do that within the space left. Within the zigzag of minuette wave (iii) subminuette wave b may not move below the start of subminuette wave a below 1,175.18.

If micro wave C does continue further then it must subdivide as a five wave structure. Within the middle of this five wave impulse minuscule wave 3 is incomplete. Within minuscule wave 3 nano wave 4 may not move into nano wave 1 price territory above 1,193.99.

This alternate wave count requires more downwards movement before subminuette wave b is complete. At 1,176.14 micro wave C would reach equality with micro wave A, and would move below the end of micro wave A avoiding a truncation. Once that is done minuette wave (iii) needs to move above the end of minuette wave (i) at 1,204.77.

The larger structure of a leading contracting diagonal is exactly the same.

This analysis is published about 02:57 p.m. EST.