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More upwards movement was allowed for as part of a fourth wave correction, but it’s more than expected. The third wave moved higher.

Summary: I have the same two wave counts. The bull wave count now has two hourly options: minute wave iii may be complete as a zigzag and minute wave iv may move lower for several days to a maximum at 1,173.13. Alternatively, minute wave iii may continue higher as an impulse, but a small fourth wave should unfold sideways first for a few days. The bear wave count also expects a small fourth wave to unfold sideways for a few days, and the invalidation point is at 1,200.03.

Click on charts to enlarge.

To see weekly charts for bull and bear wave counts go here.

Bull Wave Count

Gold Elliott Wave Chart Daily 2015

The bull wave count sees primary wave 5 and so cycle wave a a complete five wave impulse on the weekly chart.


1. The size of the upwards move labelled here intermediate wave (A) looks right for a new bull trend at the weekly chart level.

2. The downwards wave labelled intermediate wave (B) looks best as a three.

3. The small breach of the channel about cycle wave a on the weekly chart would be the first indication that cycle wave a is over and cycle wave b has begun.


1. Within intermediate wave (3) of primary wave 5 (now off to the left of this chart), to see this as a five wave impulse requires either gross disproportion and lack of alternation between minor waves 2 and 4 or a very rare running flat which does not subdivide well.

2. Intermediate wave (5) of primary wave 5 (now off to the left of the chart) has a count of seven which means either minor wave 3 or 5 looks like a three on the daily chart.

3. Expanding leading diagonals are are not very common (the contracting variety is more common).

4. The possible leading diagonal for minor wave 1 and particularly minute wave ii within it look too large.

For the last three days, volume shows an increase. This supports the bull count a little, but the increase is not higher than prior down days within the sideways chop. For volume to clearly support the bull wave count it needs to show an increase beyond 187.34 (30th April) and preferably beyond 230.3 (9th April). Only then would volume more clearly indicate a bullish breakout is more likely than a bearish breakout.

Within cycle wave b primary wave A may be either a three or a five wave structure. So far within cycle wave b there is a 5-3 and an incomplete 5 up. This may be intermediate waves (A)-(B)-(C) for a zigzag for primary wave A, or may also be intermediate waves (1)-(2)-(3) for an impulse for primary wave A.

Intermediate wave (A) subdivides only as a five. I cannot see a solution where this movement subdivides as a three and meets all Elliott wave rules (with the sole exception of a very rare triple zigzag which does not look right). This means that intermediate wave (B) may not move beyond the start of intermediate wave (A) below 1,131.09. That is why 1,131.09 is final confirmation for the bear wave count at the daily and weekly chart level.

Intermediate wave (B) is a complete zigzag. Because intermediate wave (A) was a leading diagonal it is likely that intermediate wave (C) will subdivide as an impulse to exhibit structural alternation. If this intermediate wave up is intermediate wave (3) it may only subdivide as an impulse.

At 1,320 intermediate wave (C) would reach equality in length with intermediate wave (A), and would probably end at the upper edge of the maroon channel. At 1,429 intermediate wave (C) or (3) would reach 1.618 the length of intermediate wave (A) or (1). If this target is met it would most likely be by a third wave and intermediate wave (C) would most likely be subdividing as a five wave impulse.

It is possible that the intermediate degree movement up for the bull wave count is beginning with a leading diagonal in a first wave position for minor wave 1.

A leading diagonal must have second and fourth waves which subdivide as zigzags. The first, third and fifth waves are most commonly zigzags but sometimes they may be impulses.

Within diagonals the most common depth of the second and fourth waves is between 0.66 and 0.81. Minute wave ii is 0.67 of minute wave i.

Because minute wave iii is more likely to be a zigzag than an impulse it is possible that it is over now and shorter than minute wave i. This means minute wave iv should move lower as a zigzag, to last maybe five or eight days, and not be longer than equality with minute wave ii at 1,173.13. Minute wave iv must overlap back into minute wave i price territory (which it has already) and may not move beyond the end of minute wave ii below 1,169.94.

Main Bull Hourly Wave Count

GOLD Elliott Wave Chart 2015

Within a leading diagonal, the first, third and fifth waves are most commonly zigzags, but they may also be impulses. Both structural possibilities must be considered, with the zigzag possibility more likely.

The impulse upwards for minuette wave (c) moved higher, and is now just 0.18 short of 1.618 the length of minuette wave (a). Because there is such a close Fibonacci ratio I am reasonably confident that this impulse is over here and a small consolidation should unfold sideways for a few days.

For this bull wave count minute wave iv should show up very clearly on the daily chart as a three wave zigzag. It may last either a Fibonacci five or eight days. It may not be longer than equality in length with minute wave ii because the diagonal is contracting and the maximum limit is at 1,173.13.

The normal depth for second and fourth wave corrections within diagonals is between 0.66 to 0.81 the prior actionary wave. This gives a range for minute wave iv between 1,190 – 1,181.

Minute wave iv must subdivide as a zigzag, and within it the B wave may not move beyond the start of the A wave above 1,227.54.

A new low below 1,200.03 would invalidate the alternate hourly bull wave count below (and the hourly bear wave count) providing confirmation for this main hourly bull wave count.

Alternate Bull Hourly Wave Count

GOLD Elliott Wave Chart 2015

Within a leading diagonal, the first, third and fifth waves may also be impulses. If one of these actionary waves is an impulse it is usually the third wave, so this alternate wave count must be seriously considered.

In the short term a small fourth wave correction should unfold sideways. It should show alternation with the deep 0.70 zigzag of minuette wave (ii). Minuette wave (iv) should be a shallow correction, ending at either the 0.236 or 0.382 Fibonacci ratios. It is most likely to be a flat, combination or triangle. These structures may include a new high beyond its start above 1,227.54 as in an expanded flat, running triangle or an X wave within a combination. A new high above 1,227.54 would invalidate the main hourly wave count and confirm this alternate.

Minuette wave (ii) lasted four days. Minuette wave (iv) may last at least three days, may be as long as five or eight days duration, and may not move into minuette wave (i) price territory below 1,200.03.

Although a zigzag is the more likely structure for minute wave iii (main hourly wave count), it would give this diagonal a clearer look if minute wave iii did continue higher. The upper i-iii trend line would have a clear slope.

Bear Wave Count

Gold Elliott Wave Chart Daily 2015

This wave count follows the bear weekly count which sees primary wave 5 within cycle wave a as incomplete. At 957 primary wave 5 would reach equality in length with primary wave 1.


1. Intermediate wave (1) (to the left of this chart) subdivides perfectly as a five wave impulse with good Fibonacci ratios in price and time. There is perfect alternation and proportion between minor waves 2 and 4.

2. Intermediate wave (2) is a very common expanded flat correction. This sees minor wave C an ending expanding diagonal which is more common than a leading expanding diagonal.

3. Minor wave B within the expanded flat subdivides perfectly as a zigzag.


1. Intermediate wave (2) looks too big on the weekly chart.

2. Intermediate wave (2) has breached the channel from the weekly chart which contains cycle wave a.

3. Minor wave 2 is much longer in duration than a minor degree correction within an intermediate impulse normally is for Gold. Normally a minor degree second wave within a third wave should last only about 20 days maximum. This one is in its 41st day and it is incomplete.

4. Within minor wave 1 down there is gross disproportion between minute waves iv and ii: minute wave iv is more than 13 times the duration of minute wave i, giving this downwards wave a three wave look.

This bear wave count now needs minute wave c upwards to complete as a five wave impulse. The short term outlook is exactly the same as the bull alternate hourly wave count, and the subdivisions on the hourly chart are exactly the same.

At 1,247 minute wave c would reach equality in length with minute wave a. Minor wave 2 would be very close to the 0.618 Fibonacci ratio at 1,242.

Minor wave 2 may not move beyond the start of minor wave 1 above 1,308.10. However, this wave count would be substantially reduced in probability well before that price point is passed. A breach of the upper maroon trend line, a parallel copy of the upper edge of the channel copied over from the weekly chart, would see the probability of this wave count reduced so much it may no longer be published before price finally invalidates it.

Gold Elliott Wave Chart Hourly 2015

The hourly chart for the bear count is the same as the alternate hourly chart today for the bull count. They both expect sideways movement for a consolidation for one to five days, to be followed by a fifth wave up.

Technical Analysis

Gold Chart Daily 2015

Markets do one of two things: they are either trading (sideways) or trending. Therefore, different technical analysis approaches are required for these two different scenarios.

Since 27th March Gold has been trending. This chart outlines one possible TA approach to a trending market. It follows the idea outlined in Kirkpatrick and Dhalquist, “Technical Analysis”, second edition, page 443.

On the 27th March ADX was declining and dropped below 30. This indicated a trading market, and that an oscillator should be used to indicate support and resistance. I have chosen fast Stochastics with default settings. Also, I have added upper and lower trend lines to the price chart, from the first high and low of this range with upper and lower bands of 5% of market value.

While ADX is below 20 and declining or flat, the approach would be to wait until two conditions to be met:

1. Price needs to be within the upper or lower 5% bands of the sideways range.

2. Stochastics needs to be over 80 or below 20

When these two conditions are met it should indicate either a high or a low within the range.

If this approach is continued to the situation today ADX is flat and below 20. This indicates still low volatility, very short swings, and no trend. Although price has overshot the upper trend line it has not breached with a close of 3% or more of market value. For the market to be clearly trending up ADX must be rising at least above 15. The addition of trend lines to the sideways range gives another rule: a close of 3% or more of market value above or below the outer trend lines (aqua blue) indicates a breakout in that direction and the development of a new trend.

The situation today using this approach expects a downwards move from here.

This approach should be discarded and a trend following system used when ADX is rising and above 15. That may be the first indication of a new trend. At that stage a moving average and a trend following system should be employed.

Before employing any system as the one outlined above, it is essential to test it on a data range which includes up, down and sideways price movements. As always, good money management and risk management is essential, and will make the difference between profit and loss.

For this trending period in Gold since 27th March the method outlined above would have worked well so far. This is because the trending period is sideways and is not skewed up or down. If it had been skewed up or down the addition of the trend lines may have turned an otherwise profitable approach into a loss.

At this stage for Gold the trend is clearly sideways so the trend lines may be used in this instance to assist in identifying a breakout.

This analysis is published about 06:30 p.m. EST.