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Downwards movement to a slight new low still fits the Elliott wave count.

Summary: On balance, I would expect one or maybe two more days of sideways movement. A green candlestick or doji for Thursday’s session is expected. There is a slim outside possibility that the correction is over already. A new low below 1,075.31 would provide confirmation of this idea.

To see weekly charts click here.

New updates to this analysis are in bold.


Gold Elliott Wave Chart Daily 2015
Click chart to enlarge.

Gold has been in a bear market since September 2011. There has not yet been confirmation of a change from bear to bull. Price remains below the 200 day moving average and below the final bear market trend line (copied over from the weekly chart). The bear market should be expected to be intact until we have technical confirmation of a big trend change. At this stage, all bull wave counts have been invalidated. This is the only wave count left.

The final line of resistance (bright aqua blue line copied over from weekly charts) is only overshot and not so far properly breached. While this line is not breached the bear wave count will remain possible. Simple is best, and the simplest method to confirm a trend change is a trend line.

Minute wave ii is a complete double zigzag and deep at 0.75 the length of minute wave i. It has breached the dark blue base channel drawn about minor waves 1 and 2, one degree higher. When a lower degree second wave correction does this it reduces the probability of the wave count but does not invalidate it. Base channels most often work to show where following corrections find support or resistance, but not always.

At 932 minute wave iii would reach 1.618 the length of minute wave i.

Gold often exhibits swift strong fifth waves, particularly its fifth waves within its third waves. When price moves towards subminuette wave v of minuette wave (iii) it may be explosive. For this wave count look out for surprises to be to the downside.

At 1,080 minuette wave (iii) would reach 4.236 the length of minuette wave (i).

Draw a channel about this downwards movement using Elliott’s first technique: draw the first trend line from the end of minuette wave (i) to the last low which may be minuette wave (iii), then place a parallel copy on the high of minuette wave (ii). Minuette wave (iv) may find resistance at the upper edge of the channel.

Minuette wave (iv) may not move into minuette wave (i) price territory above 1,167.49.

Today I will present three hourly charts in order of probability.


Gold Elliott Wave Chart Hourly 2015
Click chart to enlarge.

This first hourly chart is preferred because the subdivisions have the best fit at this stage.

Minuette wave (iv) may be an incomplete running contracting triangle. Subminuette wave b subdivides well as a double zigzag and is 1.14 the length of subminuette wave a.

Within subminuette wave b, this wave count has the best fit for micro wave X as a zigzag and micro wave Y also as a zigzag with an ending contracting diagonal for submicro wave (C).

Subminuette wave c may not move beyond the end of subminuette wave a above 1,095.89. This invalidation point is black and white. If it is breached, then the second hourly wave count below should be used.

Subminuette wave d may not move beyond the end of subminuette wave b when subminuette wave c is done. This invalidation point is not black and white. Subminuette wave d may end about the same level as subminuette wave b for a barrier triangle and in practice this means it may end slightly below subminuette wave b as long as the b-d trend line remains essentially flat. This is the only Elliott wave rule which has any grey area.

Finally, subminuette wave e may not move beyond the end of subminuette wave c.

The whole structure should move sideways in an ever decreasing range, taking up time. The purpose of triangles is to test our patience. They do it well. If the triangle is time consuming enough, it may find resistance at the upper edge of the channel copied over from the daily chart.

So far minuette wave (iv) has lasted three days. If it continues for two more, it may end in a total Fibonacci five days.


Gold Elliott Wave Chart Hourly 2015
Click chart to enlarge.

Minuette wave (iv) may be continuing as a combination. The first structure in the double may be an incomplete expanded flat for subminuette wave w. When that is complete the double should be joined by a three in the opposite direction for subminuette wave x, which may again make a new low below the price extreme of subminuette wave w.

A second corrective structure for subminuette wave y would most likely be a zigzag.

This is unlikely to be the whole of minuette wave (iv) although this wave count sees an expanded flat unfolding. Minuette wave (ii) was an expanded flat, so the least likely structure for minuette wave (iv) would be the same, an expanded flat. A combination would provide some structural alternation.

If micro wave B continues lower, then at 1,075.31 it would reach twice the length of micro wave A. There is no maximum limit for a B wave within a flat, but there is an Elliott wave convention which states that when B is longer than twice the length of A the probability of an expanded flat unfolding is so low that the idea should be discarded.

If price moves below 1,075.31, particularly if it does so on an increase in downwards momentum and an increase in volume, then the third wave count below should be used.


Gold Elliott Wave Chart Hourly 2015
Click chart to enlarge.

It is technically possible that minuette wave (iv) is over at this stage. But this wave count does not have a good fit in terms of recent subdivisions.

If minuette wave (iv) is complete, then it may have been a double combination: zigzag – X – flat.

Within subminuette wave y, micro wave C is seen here as an ending contracting diagonal. This does not have as good a fit as seeing this movement as a zigzag. The lower diagonal trend line is overshot twice and this was not where price found support.

If minuette wave (v) is over, then a five down should be seen. Micro wave 1 may be a leading contracting diagonal, but again this movement so far fits best as a zigzag.

Micro wave 2 may not move beyond the start of micro wave 1 above 1,094.27.

This wave count should be used if price makes a new low below 1,075.31. Because a strong fifth wave down is approaching, which should show a strong increase in downwards momentum, we should still expect any surprises to be to the downside. This is the biggest reason for publishing this wave count today. The strong downwards pull of minuette wave (v) may force minuette wave (iv) to be more brief and shallow than it may otherwise be.


Gold Chart Daily 2015
Click chart to enlarge. Chart courtesy of

Daily: Today’s downwards day comes with some increase in volume, but volume is still lower than the last strong downwards day. There is some support for the fall in price, which is expected if the trend is down and supports the trend.

ADX still indicates a downwards trend. Today ATR disagrees indicating that price is currently most likely consolidating. At this stage, both these indicators support the Elliott wave count. ADX is a lagging indicator and indicates the overall trend is down, while ATR declining indicates a small consolidation within the downwards trend is currently unfolding.

There is a very slight bullish divergence today with Stochastics and price. Stochastics moved slightly higher while price made a slight new low. This also supports the first two hourly charts which expect some upwards movement short term from here.

On Balance Volume agrees with price as it too has made a new low.

RSI remains oversold; some upwards movement from here may resolve this.

Oscillators may remain extreme for some time while price is trending. They should be used for divergence and trend lines during a trending market such as Gold is in now.

This analysis is published about 06:34 p.m. EST.