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Last analysis expected a correction should continue.

Although price breached a short term upper invalidation point the red candlestick with a long upper shadow fits a correction.

Summary: The correction is most likely still incomplete. It may continue sideways for a few days or it may end more quickly with a final wave down to 1,184 – 1,182. A new low below 1,190.9 would indicate a quicker end to this correction. When this correction is complete, then the next wave for Gold should be a strong fifth wave up. Volume analysis indicates strong upwards movement may be closer than the wave count expects; continue to look out for surprises to the upside for this market at this time.

New updates to this analysis are in bold.

Last published weekly chart is here.


Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

Gold has very likely changed from bear to bull.

So far, within the first five up, the middle of the third wave is now most likely complete. The strongest move may still be ahead. Gold typically exhibits swift strong fifth waves to end its third wave impulses. Look out for surprises to the upside for minute wave v and minor wave 5.

At 1,339 minor wave 3 would reach 6.854 the length of minor wave 1. When minute wave iv is confirmed as over, then this target may be calculated at a second degree. At that stage, it may widen to a zone, it may change, or a second target may be added.

Minute waves i, ii and now iii are complete within minor wave 3.

The pink channel is a best fit. Draw the first trend line from the highs labeled minute waves i to iii then place a parallel copy lower to contain the whole upwards wave. Minute wave iv may find support at the lower pink line. If price touches that line, it should offer a low risk entry point to join the upwards trend. The main hourly wave count today expects this line to be breached. Sometimes fourth waves are not nicely contained within channels; sometimes the channel is overshot. If this channel is overshot, it should not be by too much and price should return back into the channel fairly promptly. If this channel is breached by a full daily candlestick below and not touching it, then the wave count would be in doubt at the daily chart level.

Minute wave iv may not move into minute wave i price territory below 1,081.57.


Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

This main hourly wave count expects to see alternation in structure between the zigzag of minute wave ii and the triangle of minute wave iv. This is the main wave count for this reason only.

Unexpected upwards movement for a spike up on Wednesday may have been a continuation of minuette wave (b) within a triangle.

Minuette wave (b) subdivides as a double zigzag. Minuette wave (a) may be seen as a single zigzag. Minuette wave (b) is less than 0.9 the length of minuette wave (a), so a flat correction is not possible as the minimum requirement was not met. A triangle may still be unfolding sideways.

Within a possible regular contracting or barrier triangle, minuette wave (c) may not move below the end of minuette wave (a) at 1,190.9. Thereafter, minuette wave (d) may not move substantially above the end of minuette wave (b) at 1,253.1. The triangle will remain valid as long as the (b)-(d) trend line remains essentially flat.

This main wave count expects minute wave iv to find support at the pink trend line. It may end about the 0.236 Fibonacci ratio at 1,213.91. If it continues for a further four sessions, it may total a Fibonacci thirteen daily candlesticks.

The divergence between price and MACD at the hourly chart level supports this wave count. Subminuette wave y made a new high above subminuette wave w, but MACD made a lower high. This indicates weakness in upwards movement from price.


Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

Minute wave iv may be continuing as a zigzag. This would offer no structural alternation with minute wave ii which was also a zigzag. For this reason, this must be an alternate wave count with a lower probability.

If any movement below 1,190.9 is seen, then the triangle would be invalidated leaving only this alternate wave count. At that stage, expect price to continue lower to the target and overshoot the pink trend line.

At 1,182 minuette wave (c) would reach equality in length with minuette wave (a). This is close to the 0.382 Fibonacci ratio at 1,184 giving a $2 target zone with a reasonable probability.

This alternate wave count could see minute wave iv end in just one session. It would not exhibit a Fibonacci duration.


Gold Chart Daily 2016
Click chart to enlarge. Chart courtesy of

Finalised volume data for Wednesday’s session shows a green candlestick with strong volume. The rise in price was supported by volume. This may be an indicator that when price breaks out of this consolidation zone it may be upwards. The long upper shadow on Wednesday’s candlestick is bearish; the bulls pushed price strongly higher but the bears were able to bring price down closer to the lows of the day.

The strong volume for 16th February may be an anomaly. Volume for this daily candlestick may include after hours trading for Monday 15th February which was a holiday in the USA. If this candlestick is ignored, then strongest volume during this consolidation is for an upwards day. This suggests price may break out upwards; this supports the Elliott wave count.

If strong volume for the candlestick of 16th February is not ignored, then strongest volume during this consolidation is for a downwards day. This indicates price should break out of the consolidation downwards; this does not support the Elliott wave count.

So far during this consolidation price is finding support at the 9 day Exponential Moving Average.

ADX is flat today indicating the market is not trending but consolidating. Overall, ATR still agrees as it is overall flat still.

On Balance Volume has broken above its dark blue and green trend lines. OBV is often a reliable leading indicator. A break of a trend line often precedes a break of price in the same direction. This break upwards by OBV today is strong support for the Elliott wave count which expects the breakout of this consolidation may be upwards.

The trend lines on price to delineate this consolidation zone are adjusted today. The lower edge is at 1,191. This red horizontal line has previously provided resistance and now provides support. The upper edge of this consolidation is delineated by a shorter olive green line. This is about 1,250. A break above 1,250 or below 1,191 on a day with an increase in volume would be a classic breakout of a consolidation. At that stage, price should be expected to continue in the same direction of the breakout. The Elliott wave count expects the breakout to be upwards.

This analysis is published @ 09:42 p.m. EST.