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Downwards movement did not continue as expected. A new high above 1,272.34 invalidated the Elliott wave count at the hourly chart level.

Summary: In the short term I expect upwards movement to end about 1,281 – 1,287. This upwards movement is a deep second wave correction, and it should be followed by a strong third wave down which may be confirmed with a new low below 1,266.26. The invalidation point is at 1,308.10. The trend at intermediate degree remains down.

*Note: I can publish text and charts only today, and for the next session on Monday. I am travelling and my current internet connection is not strong enough to upload video. I have said everything I intend to say in the text below.

Click on charts to enlarge.

Main Daily Wave Count

Gold Elliott Wave Chart Daily 2015

At this stage I judge this main wave count to have an even probability with the alternate below. I will let the structure of downwards movement, and momentum, tell us which wave count is correct over the next few weeks. At this stage they both expect more downwards movement so there is no divergence in the expected direction.

This wave count sees a five wave impulse down for cycle wave a complete, and primary wave 5 within it a completed five wave impulse. The new upwards trend at cycle degree should last one to several years and must begin on the daily chart with a clear five up.

The first five up may be a complete leading expanding diagonal. After paying closer attention over the last several days to the frequency of leading diagonals I am revising my prior stance that they aren’t common. I’m seeing quite a few, and a few of them are expanding. The structure of intermediate wave (1) as a leading expanding diagonal does not pose a problem to this wave count.

Within leading diagonals the second and fourth waves must subdivide as zigzags. The first, third and fifth waves are most commonly zigzags but they may also be impulses. This wave count sees minor waves 1, 3 and 5 as zigzags.

Leading diagonals are almost always followed by very deep second wave corrections, often deeper than the 0.618 Fibonacci ratio. This wave count expects a big deep correction downwards, and should subdivide as a clear three on the daily chart (the alternate below expects a clear five down).

My biggest problem with this wave count, and the reason I will retain the alternate, is the structure of intermediate wave (2) within primary wave 5. This is a rare running flat but the subdivisions don’t fit well. Minor wave C should be a five wave structure, but it looks like a clear three on the daily chart. If you’re going to label a running flat then it’s vital the subdivisions fit perfectly and this one does not. This problem is very significant and this is why I judge the two wave counts to be about even in probability.

Intermediate wave (5) looks like a zigzag rather than an impulse, and has a corrective wave count. This is also a problem I have with this wave count.

Intermediate wave (2) is most likely to subdivide as a zigzag, which subdivides 5-3-5. When this 5-3-5 is complete then how high the following movement goes will tell us which wave count is correct.

Intermediate wave (2) of this new cycle degree trend may not move beyond the start of intermediate wave (1) below 1,131.09.

Volume for Friday’s session is low, supporting the idea that Friday’s upwards movement is a correction and not the start of a new upwards trend.

GOLD Elliott Wave Chart 2015

This upwards movement is too deep to be a fourth wave correction. It is showing up clearly on the daily chart. This looks like a deep second wave correction.

I have tried to see if minute wave i could be an impulse, but it does not fit. It does fit perfectly as a leading expanding diagonal. This is being followed by a typically deep second wave correction.

At 1,281 minuette wave (c) would reach 1.618 the length of minuette wave (a). This is somewhat close to the 0.618 Fibonacci ratio of minute wave i at 1,287. This gives a rather wide target zone of $6. I favour the upper edge of this zone because I would expect minute wave ii to be a deep correction.

If upwards movement keeps going above the 0.618 Fibonacci ratio then the next likely place for it to end may be at 1,295 where minuette wave (c) would reach 2.618 the length of minuette wave (a). I will consider this target because second wave corrections following a leading diagonal in a first wave position are often very deep.

Minute wave ii may not move beyond the start of minute wave i above 1,308.10. If this invalidation point were to be breached the wave count would change significantly at the daily chart level. I would revive the idea that recent downward movement was a fourth wave correction, and a fifth wave up would be unfolding. However, this does not have the “right look” on the daily chart anymore and so I don’t want to publish it again.

Alternate Daily Wave Count

Gold Elliott Wave Chart Daily Alternate II 2015

The maroon channel about cycle wave a from the weekly chart is now breached by four daily candlesticks, and is now also breached on the weekly chart by one weekly candlestick. If cycle wave a is incomplete this channel should not be breached. For this reason this wave count, despite having the best fit in terms of subdivisions, only has an even probability with the main wave count. It will prove itself if we see a clear five down with increasing momentum on the daily chart.

Draw the maroon trend line on a weekly chart on a semi-log scale, and copy it over to a daily chart also on a semi-log scale (see this analysis for a weekly chart).

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.

Intermediate wave (2) is now a complete expanded flat correction. Minor wave C is a complete expanding ending diagonal. Expanded flats are very common structures.

This wave count has more common structures than the main wave count, and it has a better fit.

Within an ending diagonal all the sub waves must subdivide as zigzags. The fourth wave should overlap first wave price territory. The rule for the end of a fourth wave of a diagonal is it may not move beyond the end of the second wave.

Although Gold almost always adheres perfectly to trend channels, almost always is not the same as always. This wave count is still possible. The trend channel breach is a strong warning that this wave count may be wrong and we need to heed that warning with caution at this stage.

A new low below 1,131.09 would confirm that a third wave down is underway.

When the first 5-3-5 down is complete on the daily chart this wave count would see it as 1-2-3 and the main wave count would see it as A-B-C. The following upwards movement will tell us which wave count is correct. If it moves back into price territory of the first 5 down then it can’t be a fourth wave correction so the main wave count would be correct. If it remains below the price territory of the first five down then it would be a fourth wave correction and this alternate would be correct. This divergence will not begin for at least a couple of weeks.

At 956.97 primary wave 5 would reach equality in length with primary wave 1.

Intermediate wave (2) may not move beyond the start of intermediate wave (1) above 1,345.22. If this invalidation point is passed this wave count would be fully invalidated.

Gold Elliott Wave Chart Hourly Alternate 2015

I expected to publish an alternate idea at the hourly chart level, but the downwards wave labelled minuette wave (v) does not subdivide at all as an impulse, and fits only as a zigzag. This means that at this stage a complete leading diagonal for a first wave is the only wave count I can see fitting at the hourly chart level.

The subdivisions, invalidation point and targets are the same for both hourly wave counts again today.

I will be expecting a third wave down to begin once this second wave correction is complete. The confirmation point for a third wave may be at 1,266.26, the high of minuette wave (a). Once the upwards zigzag of minute wave ii is completed, then a new low back into minuette wave (a) price territory would eliminate the possibility that a new upward impulse is unfolding, because downwards movement would then be back in first wave price territory. A new low below 1,266.26 confirms that the upwards movement labelled minute wave ii is a three wave structure which would have to be complete.

If my analysis of minute wave i as a diagonal is correct, then downwards movement is a five and upwards movement is a three. This supports the idea that the trend is now down.

This analysis is published about 03:30 p.m. EST.