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The short term target for some more upwards movement at 1,091 was reached and passed so far by 3.9.

Summary: The main Elliott wave count now expects downwards movement, but classic technical analysis remains bullish. It would be wise to wait for price to confirm a resumption of the downwards trend while these two views diverge. A new low below 1,056.5 is required for confidence that Gold will break out of this consolidation downwards and not upwards. The alternate wave count allows for more upwards movement while price remains above 1,056.5.

New updates to this analysis are in bold.

To see the last long term analysis with weekly charts click 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. 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. Simple is best, and the simplest method to confirm a trend change is a trend line.

Minute wave ii is a complete zigzag and deep at 0.73 the length of minute wave i.

At 930 minute wave iii would reach 1.618 the length of minute wave i.

Minuette wave (i) is complete.

The main wave count today looks at the possibility that minuette wave (ii) is now a complete double combination: flat – X – zigzag. The structure of micro wave C within the zigzag is now complete at the hourly chart level. However, there is zero confirmation of a trend change at this stage. A new low below 1,056.5 would invalidate the alternate below and provide price confirmation that the upwards wave labelled subminuette wave y must be over.


Gold Elliott Wave Chart Hourly 2015
Click chart to enlarge.

The triangle for submicro wave (4) did not complete and meet all Elliott wave rules for a contracting or barrier triangle because minuscule wave E moved slightly below the end of minuscule wave C. Submicro wave (4) morphed into a double combination: zigzag – X – flat. Thereafter, submicro wave (5) completed upwards.

Micro wave C is 3.8 longer than micro wave A. The difference is just less than 10% the length of micro wave C so far. If price does not move any higher, this would be an acceptable Fibonacci ratio.

Ratios within micro wave C are: submicro wave (3) is 1.14 short of 4.236 the length of submicro wave (1), and submicro wave (5) has no Fibonacci ratio to either of submicro waves (3) or (1).

Draw a channel about micro wave C using Elliott’s second technique: draw the first trend line from the ends of submicro waves (2) to (4) then place a parallel copy on the end of submicro wave (3). When this light blue channel is breached by downwards movement that shall be the earliest indication of a possible trend change.

Some further confidence in a trend change would come with a breach of the wider violet channel which is copied over from the daily chart.

Final confirmation and reasonable confidence may be had with a new low below 1,056.5.


Gold Elliott Wave Chart Daily 2015
Click chart to enlarge.

This wave count is identical to the main daily wave count up to the low labelled minuette wave (i).

Thereafter, it looks at the possibility that minuette wave (ii) is unfolding as a flat correction. Within the flat, subminuette wave a is a three and subminuette wave b is a three and 1.06 the length of subminuette wave a. This would be an expanded flat correction.

At 1,109 subminuette wave c would reach 1.618 the length of subminuette wave a. This is somewhat close to the 0.382 Fibonacci ratio at 1,103 giving a $6 target zone.

Subminuette wave c must subdivide as a five wave structure.

This alternate expects a slower end to the correction of minuette wave (ii). So far it has lasted 27 days. If it exhibits a Fibonacci duration, it may continue for a further 7 days to total a Fibonacci 34.

Subminuette wave c must subdivide as a five wave structure. It may be either an impulse or an ending diagonal. Both possibilities are considered below, the impulse first and the ending diagonal second.


Gold Elliott Wave Chart Hourly 2015
Click chart to enlarge.

If subminuette wave c is an impulse, then within it micro wave 3 may be over here or it may continue yet further. If it does continue, then at 1,112 it would reach 1.618 the length of micro wave 1. At this stage, it is longer than equality with micro wave 1 and the structure on the five minute chart can be seen as complete, but there is zero evidence that it has finished.

It must be accepted that price could continue higher while price remains within the light blue channel.

Micro wave 3 would be confirmed as over when the light blue channel is breached. At that stage, micro wave 4 should unfold over a few days as a shallow sideways correction. Micro wave 4 may not move into micro wave 1 price territory below 1,081.4.


Gold Elliott Wave Chart Hourly 2015
Click chart to enlarge.

The other structural possibility of an ending diagonal for subminuette wave c must be considered.

An ending diagonal requires all sub waves to subdivide as zigzags. Micro wave 3 does fit as a zigzag (as does micro wave 1) and it does have a suspiciously three wave look to it on the hourly chart.

Diagonals require the fourth wave to overlap back into first wave price territory. Micro wave 4 must move below 1,081.4.

Micro wave 3 is longer than micro wave 1, so the diagonal should be expanding. Micro wave 4 would have to move low enough, so that the trend lines of the diagonal diverge meeting the rule.

The common depth for second and fourth waves within diagonals is between 0.66 to 0.81 the first and third wave. This gives a range for micro wave 4 between 1,070 – 1,064.

The rule for the end of a fourth wave of a diagonal is it may not move beyond the end of the second wave. Micro wave 4 may not move below 1,056.5.

This structure must be considered because it is a viable possibility, and it provides the final confidence point for the main wave count. If price moves below 1,056.5, then subminuette wave c cannot be continuing and would have to be over.


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 (see weekly charts for this larger structure). 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 972.6 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 may now be a complete double combination. It may also be an incomplete flat correction requiring more upwards movement. The alternate ideas for the main wave count work in exactly the same way for this daily chart.

If minor wave B is now over, then at 1,010 minor wave C would reach 0.618 the length of minor wave A. If minor wave B moves any higher, then this target must also move correspondingly higher. Confirmation of the end of minor wave B is still required for this alternate idea also, a new low below 1,056.5.

Minor wave B may not move beyond the start of minor wave A above 1,189.

For this ending diagonal idea, the final fifth wave of intermediate wave (5) should be expected to overshoot the (1)-(3) trend line, which is a very typical look for contracting diagonals. What that means is if price moves lower and it overshoots the lower black line (which is the same as the lower cyan line on the main wave count), then look out for a possible end to this bear market.

At that stage, any shorts should be carefully handled. Manage risk so that your account is not left exposed at that stage to a potential major trend change.


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

Upwards movement for Wednesday comes with an increase in volume. The rise in price is well supported. Volume for Wednesday is stronger than all but one day during the consolidation. Volume for 4th of December, another upwards day, was stronger. Overall, it looks like an upwards breakout is underway. Price has closed above the upper line of resistance which delineates the consolidation and has done so with a volume spike.

The volume profile is bullish and does not support the Elliott wave count. For this reason today the Elliott wave count absolutely requires price confirmation before any confidence may be had in it.

Price is finding resistance about 1,094 – 1,098, a prior area of support (blue horizontal line). If price breaks above this line, then the next line of resistance is 1,109 – 1,110.

ADX is now turning upwards and is above 15. The +DX line is above the -DX line. ADX indicates there is an upwards trend.

ATR is beginning to agree and is overall moving higher.

Stochastics is reaching into overbought. If there is an upwards trend, then this oscillator can remain extreme for long periods of time. Only if it shows short term divergence with price would it be useful in a trending market to indicate a possible correction against the trend.

RSI is not overbought. There is room yet for price to rise further.

Overall, the classic technical analysis picture is much more bullish than bearish. This does not support the Elliott wave count. If the alternate Elliott wave count (the first hourly alternate particularly) is correct, then price may be expected to continue overall higher for a few days (with a fourth wave correction to move sideways along the way up). This may explain the bullish volume profile and may resolve the bullishness before price is ready for the resumption of a downwards trend.

If we see another upwards day with an increase in volume, then I would consider the possibility that the second daily alternate is correct and the bear market could possibly be over; intermediate wave (5) may have ended at the last low on 3rd December. There is not enough bullish confirmation for such a bullish wave count at this stage though for me to have enough confidence to publish the idea. It calls for a trend change at cycle degree.

This analysis is published @ 06:11 p.m. EST.