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A new high above 1,211.78 confirmed the main hourly Elliott wave count and invalidated the alternate.

Summary: I expect overall two more days of upwards movement to 1,243. When this fourth wave correction is done I expect to see a long strong fifth wave down. I am swapping over the main and alternate daily wave counts today; the new main daily wave count has a higher probability.

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Main Daily Wave Count

Gold Elliott Wave Chart Daily 2015

The wave counts for Silver and GDX, which see a cycle degree (Silver) or primary degree (GDX) trend change at the last low, have both been invalidated. This will reduce the probability that Gold has had a cycle degree trend change, and so I am swapping over the daily wave counts today and giving this main wave count a higher probability.

This main wave count sees Gold as still within a primary degree downwards trend, and within primary wave 5 intermediate wave (3) is in its early stages. At 956.97 primary wave 5 would reach equality in length with primary wave 1.

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. The breach of this channel is a warning this wave count may be wrong, and so I will retain the alternate.

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. Within an ending diagonal all the sub waves must subdivide as zigzags. The fourth wave should overlap first wave price territory. Expanded flats are very common structures and ending diagonals are more common than leading diagonals.

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

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

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.

Use Elliott’s first technique to draw a channel about minor wave 1: draw the first trend line from the ends of minute waves i to iii, then place a parallel copy on the end of minute wave ii. Copy this over to the hourly chart.

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 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.

GOLD Elliott Wave Chart 2015

The last wave down from the high labelled minuette wave (a) to the low labelled minuette wave (b) looks like a three wave structure on the hourly chart, which perfectly fits as a B wave of an expanded flat correction.

Minute wave ii was a deep double zigzag lasting a Fiboancci three days. Minute wave iv is most likely to show alternation in structure and depth, which is most typical for Gold. Minute wave iv is unfolding as an expanded flat correction, a very common structure. It is most likely to end about the 0.382 Fibonacci ratio at 1,243. If it continues for another two days it may end in a total Fibonacci eight days, 2.618 the duration of minute wave ii. This would be typical behaviour for Gold.

Minuette wave (c) may only subdivide as a five wave structure, either an impulse or an ending diagonal. So far it looks like it will be an impulse, which is more likely. Within it subminuette wave ii may not move beyond the start of subminuette wave i below 1,197.71. Subminuette wave ii must look like a clear three on the hourly chart, and may now be complete.

The pink channel here is copied over from the daily chart. Fourth waves often end contained within these channels, but not always. That is why Elliott had a second technique to use when the fourth wave overshoots the channel. If minute wave iv continues for two more days it will overshoot the channel. That’s okay. We will redraw the channel using Elliott’s second technique to show us where minute wave v may end, although in this case I am expecting a long strong fifth wave so the lower end of a channel drawn using either technique will probably be breached.

Minute wave iii has no Fibonacci ratio to minute wave i and it was shorter than 1.618 the length of minute wave i. For this reason I will expect minute wave v to be a strong fifth wave typical of commodities, longer than minute wave iii.

If 1,197.71 is breached this hourly wave count would be invalidated. If that happens the only scenario I can see would be that minute wave iv is over and minute wave v downwards is underway. Minute wave v would most likely be unfolding as an ending diagonal because the first move down looks like a three wave structure. This idea has such a low probability, I don’t want to chart it. I will only publish it if it proves itself to be true.

Alternate Daily Wave Count

Gold Elliott Wave Chart Daily Alternate 2015

At this stage I judge this alternate wave count to a lower probability. The structure of downwards movement, and momentum, will determine 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.

My biggest problem with this wave count 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.

Intermediate wave (5) looks like a zigzag rather than an impulse, and has a corrective wave count. This movement fits better for the main 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.

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

This analysis is published about 02:15 p.m. EST.