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The target at 1,082 – 1,084 was met and exceeded by 4.94.

Summary: The structure of this C wave upwards is incomplete. A target for it to end on Monday or Tuesday is at 1,104. At the hourly chart level, the invalidation point can be moved up to 1,065.54.

New updates to this analysis are in bold.

To see weekly charts and the difference between the two wave counts go here.


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, and so at this stage any bull wave count would be trying to pick a low which is not advised. Price remains below the 200 day moving average and below the cyan 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.

The final line of resistance (cyan 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.

Minuette wave (i) is complete.

Minuette wave (ii) may find resistance at the upper dark blue trend line. This may see it end about the 0.382 Fibonacci ratio of minuette wave (i) at 1,104.

Minuette wave (i) lasted 31 days, three short of a Fibonacci 34. It looks like minuette wave (ii) may be more brief and shallow than second wave corrections normally are, at this stage, due to the strong downwards pull from the middle of a third wave. So far it has lasted five days. If it continues now for a further three days, it may total a Fibonacci eight; give or take one either side of this number would produce an acceptable Fibonacci relationship.

Minuette wave (ii) looks like it is most likely unfolding as an expanded flat correction at this stage. When this structure is complete, then we must consider the alternate idea that the expanded flat is only wave A within the correction. An alternate would then be published that moves the degree of labelling within the expanded flat down one degree and expects minuette wave (ii) to continue further as a larger flat correction, double flat or combination.

Minuette wave (ii) may not now be unfolding as a zigzag or zigzag multiple. It may also not be a triangle. At the end of this week, it also looks very unlikely to be a double combination as I had labelled it previously with the second structure underway, but it may yet be a double flat with this expanded flat only the first of two.


Gold Elliott Wave Chart Hourly 2015
Click chart to enlarge.

Subminuette wave c is unfolding as a simple impulse.

Within subminuette wave c, there are two ways to look at micro wave 3. It may be over as labelled here, or it may yet require a final fifth wave as per the labelling on the alternate hourly chart below. It is more likely that it is over here. The subdivisions fit, it has a typical impulse look for Gold, and it is just 0.17 short of 1.618 the length of micro wave 1.

Micro wave 2 was a zigzag and shallow at 0.381 the depth of micro wave 1. Micro wave 4 should exhibit some alternation. It may be unfolding as a flat correction and it may be more shallow to end about the 0.236 Fibonacci ratio of micro wave 3 at 1,082. If micro wave 4 is an expanded flat (or combination or running triangle), then within it sub micro wave (B) may make a new high above the start of sub micro wave (A) at 1,088.94. Sub micro wave (B) must reach up to a minimum 0.9 length of sub micro wave (A) at 1,088.29 for a flat correction to be valid. It has not quite managed to do that yet, so markets may open next week with at least a small amount of upwards movement before continuing sideways to complete micro wave 4.

The channel drawn about subminuette wave c is a best fit. Use the lower edge for support. If price touches it, that may be the end of micro wave 4.

At 1,104 subminuette wave c would reach 2.618 the length of subminuette wave a. This is also the 0.382 Fibonacci ratio of minuette wave (i) and so this target has a good probability.

Micro wave 4 may not move into micro wave 1 price territory below 1,065.54. If downwards movement breaches this invalidation point, then the alternate below should be considered.


Gold Elliott Wave Chart Hourly 2015
Click chart to enlarge.

A possible combination looks to be very unlikely at this stage. Combinations move sideways, but so far this correction has a slope. It’s an expanded flat. The questions are: when is it over? And when the structure is complete, is that minuette wave (ii) in its entirety or just the first of a double flat correction?

If price breaks below 1,065.94 on Monday, then the probability of minuette wave (ii) being over must be seriously considered. The next wave down should be a strong third wave at four degrees. There may now be enough of a strong downwards pull to force this second wave correction to be more brief and shallow than otherwise. There is little support from regular technical analysis for this idea though, so it has a low probability.

If micro wave 4 is over as labelled, then both micro waves 2 and 4 are zigzags and there is little alternation between them. This also reduces the probability of this idea.

Micro wave 5 may make a slight new high above the end of micro wave 3 to avoid a truncation. Once that is done, then it is possible that the whole correction for minuette wave (ii) could be over.

A new low below 1,065.94 could not be a fourth wave correction within the impulse unfolding upwards, so at that stage the impulse must be over. At that stage, there would be two possibilities to consider.

1. Minuette wave (ii) is over as per this alternate.

2. Minuette wave (ii) is not quite halfway complete. It may continue sideways as a double flat and this expanded flat is just the first in the double. A three in the opposite direction for an X wave may unfold.

If this wave count is confirmed with a new low below 1,065.94 on Monday, then for confidence it would absolutely require a five down to be clear on the hourly chart.


Gold Elliott Wave Chart Daily 2015
Click chart to enlarge.

I am aware that this is the wave count which EWI and Danerics have. The implications are important, so I will follow this wave count daily for members here too.

Everything is the same up to the end of the triangle for primary wave 4. Thereafter, primary wave 5 is seen as an ending contracting diagonal.

Within the ending contracting diagonal, it is not possible to see intermediate wave (2) as a zigzag and meet all Elliott wave rules. To see an explanation of why see this video at 10:25.

The same problem exists for the ending diagonal of primary wave 5 itself. Intermediate wave (3) is longer than intermediate wave (1) which would suggest an expanding diagonal, but intermediate wave (4) is shorter than intermediate wave (2) and the trend lines converge which suggests a contracting diagonal.

From “Elliott Wave Principle” by Frost and Prechter, 10th edition, page 88: “In the contracting variety, wave 3 is always shorter than wave 1, wave 4 is always shorter than wave 2, and wave 5 is always shorter than wave 3. In the expanding variety, wave 3 is always longer than wave 1, wave 4 is always longer than wave 2, and wave 5 is always longer than wave 3.”

This structure violates the rules for both a contracting and expanding variety. If the rules in Frost and Prechter are accepted, then this is an invalid wave count.

It may be that the rules need to be rewritten to add “sometimes a third wave may be the longest within a contracting or expanding diagonal”. But I have never seen Robert Prechter publish such a rule, I do not know that it exists.

I cannot reconcile this wave count from EWI with the rules in Frost and Prechter.

If an ending contracting diagonal is unfolding, then the (1) – (3) trend line may be overshot signalling the end of intermediate wave (5). If price behaves thus and turns around and moves strongly higher, then this wave count must be accepted and the rules for diagonals will need to be rewritten.

I will continue to follow this possibility as price moves lower.

Intermediate wave (5) should be shorter than intermediate wave (1). At 977.53 intermediate wave (5) would reach equality in length with intermediate wave (1). A new low below this point would take this possible diagonal structure too far from the rules. At that stage, it really should be finally discarded.

All sub waves within ending diagonals must subdivide as zigzags. Within the zigzag of intermediate wave (5), minor wave B should unfold over several days. At this stage, there is no divergence between this idea and the main Elliott wave count.

Minor wave B may not move beyond the start of minor wave A above 1,191.66.

I am uncomfortable with publishing this wave count and I only do so because it has been published by Elliott Wave International. I am not comfortable with publishing any wave count which violates the rules in Frost and Prechter. However, when looking at primary wave 5 on the weekly chart it does look like a diagonal is unfolding.

Short to mid term there is no divergence in expected direction between this wave count and the main wave count.


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

A strong upwards day with a strong increase in volume supports the upwards movement in price. This supports the idea that price should continue higher next week. Friday’s volume was the strongest since the downwards day of 24th August.

On Balance Volume is bullish now that it has broken above both its short held trend lines. The next line of resistance for OBV is the new dark blue line which is a reasonable distance away.

There is a zone of resistance about 1,097 – 1,104 where price previously found support. This supports the target for the Elliott wave count at 1,104.

ADX is declining and no longer indicates a downwards trend is in place. ATR is strongly increasing. Together these two lagging indicators may be beginning to indicate a new upwards trend. If ADX turns upwards and the green +DX line crosses above the red -DX line, then an upwards trend would be indicated. For now a correction against the trend should be expected until proven otherwise.

This analysis is published about 11:58 p.m. EST.