Select Page

I had expected a downwards day for Tuesday which is what has happened. The depth of this downwards movement may be surprising, but it fits the wave count nicely.

Summary: It is most likely the correction is incomplete. I expect upwards movement to 1,243 to complete a green candlestick for Wednesday’s session. This would be confirmed with a new high above 1,236.90. Alternatively, it is just possible (highly unlikely) that a strong fifth wave down has begun. This possibility will increase in probability if we see a new low below 1,203.88 in the short term. A possible target for the fifth wave to end may be at 1,146.

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. 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 deep second wave corrections, sometimes deeper than the 0.618 Fibonacci ratio. This wave count expects a big deep correction downwards, and it should subdivide as a clear three on the daily chart (the alternate below expects a 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 at minor degree. When this 5-3-5 is complete then how high the following movement goes will tell us which wave count is correct.

It is possible to move the degree of labelling within intermediate wave (2) all up one degree and see it as over. However, I will not publish this idea as it is extremely unlikely and publishing it would give it undue weight. That would see intermediate wave (2) as far too brief and too shallow in comparison to intermediate wave (1). Only if price breaks above 1,251.97 will I seriously consider this idea.

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

From January 23rd onwards, since the expected trend change, volume is highest on down days. This supports the idea that we may have seen a trend change and the trend is now down. Volume for Silver is even clearer, with a big spike on the down day there for 29th January.

The two hourly charts below work for both daily wave counts.

Main Hourly Wave Count

GOLD Elliott Wave Chart 2015

My initial perception of the strong downwards movement for Tuesday was my prior analysis of minute wave iv must have been wrong, that it must be over and the new downwards movement must be the fifth wave to follow it. However, I have tried to see a complete corrective structure within minute wave iv and the only option which I find fits is a very rare triple zigzag. This has a very low probability and it outlined as an alternate below.

What is much more likely is minute wave iv is incomplete and Tuesday was a downwards day as expected for minuette wave (b).

Minute wave ii was a deep 0.61 double zigzag. I would expect to see alternation between minute waves ii and iv, so minute wave iv is unlikely to be a zigzag (or multiple zigzag). Minute wave iv is most likely to be a flat, triangle or combination. All these structures may include a new low for minuette wave (b) or (x) within minute wave iv.

At this stage it looks like minute wave iv may be unfolding as a very common expanded flat correction. Within it minuette wave (a) subdivides perfectly as a three, a double zigzag. Minuette wave (b) is a 169% correction of minuette wave (a). This is deeper than the maximum common length of 138% but it is still entirely viable, I have seen quite a few expanded flats with deep B waves.

Minuette wave (b) fits nicely as an expanded flat: subminuette wave b is a 122% correction of subminuette wave a, and subminuette wave c is 1.67 short of 4.236 the length of subminuette wave a.

I do not expect to see a Fibonacci ratio between minuette waves (a) and (c): if minuette wave (c) were to reach only 1.618 the length of minuette wave (a) it would be truncated and minute wave iv would be a very rare running flat; if minuette wave (c) were to reach 2.618 the length of minuette wave (a) that would take price above the invalidation point.

I expect minuette wave (c) to end about the 0.382 Fibonacci ratio of minute wave iii at 1,243. This would give the expanded flat correction of minute wave iv a typical look.

Minuette wave (c) must subdivide as a five wave structure, either an impulse or ending diagonal. It is most likely to be a simple impulse.

Minute wave iv should find resistance at the upper edge of the pink channel copied over from the daily chart. It may end here.

A new high above 1,236.90 would invalidate the alternate hourly wave count below and provide confidence in the target.

The only part of this wave count that I am uncertain about today is the lower invalidation point. Because I can see subminuette wave c as a complete five wave structure, and because it is so very long in relation to subminuette wave a, it is most likely to be over here. However, I can also see current upwards movement as a continuation of micro wave 4, and I am concerned that we may see one final low for micro wave 5 to complete minuette wave (b).

If minuette wave (b) is complete at 1,203.88 then within minuette wave (c) no second wave correction may move below its start at 1,203.88.

Minute wave iv may not move into minute wave i price territory above 1,251.97.

If minuette wave (c) manages to complete in one day then minute wave iv may end in a total Fibonacci five days, 1.618 the duration of minute wave iii which lasted a Fibonacci three days. This will be my expectation still.

Alternate Hourly Wave Count

GOLD Elliott Wave Chart 2015

I have tried to see minute wave iv as a completed corrective structure, and in this process I have eliminated all possibilities except a very rare triple zigzag.

Minute wave iv does not fit as a simple A-B-C flat or single zigzag. It will not fit as a double zigzag. It is not a combination, and no three within it has a B wave which is deep enough for a B wave of a flat correction. It is quite obviously not a triangle.

Triple zigzags are very rare indeed. The rarity of this structure makes the probability of this wave count very low.

If minute wave iv is a triple zigzag then there is very little alternation between the deep double zigzag of minute wave ii and the shallow triple for minute wave iv. This would be highly unusual for Gold and further reduces the already low probability of this wave count.

If minute wave iv is over then at 1,146 minute wave v would reach 1.618 the length of minute wave i.

Within minute wave v minuette wave (i) subdivides perfectly as a completed five wave impulse. This would be expected to be followed by a deep second wave correction for minuette wave (ii), to most likely end about the 0.618 Fibonacci ratio at 1,224.

Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,236.90.

Alternate Daily Wave Count

Gold Elliott Wave Chart Daily Alternate 2015

The maroon channel about cycle wave a from the weekly chart is now breached by a few 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 and this reason only 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 an expanded flat correction. Minor wave C is a complete expanding ending diagonal. Expanded flats are very common structures and ending diagonals are more common than leading diagonals.

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

For this alternate wave count the diagonal is an ending diagonal for minor wave C. 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 entirely 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. For this wave count once minor waves 1 and 2 are complete (which would be labelled minor waves A and B for the main wave count) minor wave 3 downwards should be very strong and extended, and would probably take price below 1,131.09.

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

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.

The short to mid term outlook for both wave counts is identical. The structure and labelling on the hourly chart is identical, so I will publish only the one hourly chart while the wave counts do not diverge.

This analysis is published about 04:13 p.m. EST.