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Sideways movement was expected to continue for a correction.

Summary: The correction is still incomplete. It looks like it may most likely continue sideways as a triangle which may end in two more trading days. It is still possible that it could end Monday as a quicker zigzag but this looks much less likely. The trend is up, so the breakout should be up.

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 now expects a triangle is most likely unfolding sideways. Upwards movement is finding resistance at the lilac line and downwards movement is finding support at the (a)-(c) triangle trend line. To see how to draw the lilac line see the weekly chart here.

If the main hourly wave count is correct and Gold continues sideways to complete a triangle, then the following fifth wave may not be a strong extension and may be surprisingly short. Gold often exhibits very short quick fifth waves after its fourth wave triangles. The target for minor wave 3 at 1,339 may be too high. When minute wave iv is complete, if it is a triangle, then the target will probably be recalculated. If minute wave v is just 33.88 in length, which would be the most likely length, then at that point it would reach equality in length with minute wave i.

If the alternate hourly wave count is correct, then the lower pink trend line may be breached. Sometimes fourth waves are not contained nicely within channels; sometimes they breach channels.

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 mostly for this reason.

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 two sessions, it may total a Fibonacci thirteen daily candlesticks.

Within minuette wave (c) down, subminuette wave b fits as a zigzag. Within the zigzag, micro wave B was a running contracting triangle supported by an almost flat MACD that is very close to the zero line. I have tried alternate ideas to see subminuette wave b complete at the high labelled micro wave 2, but so far I have not been able to find a solution which fits that meets all Elliott wave rules and avoids very rare structures like running flats. The conclusion is that subminuette wave c begins where it is labelled, which means it is most likely incomplete.

Within subminuette wave c, micro wave 5 only needs to complete. It may move slightly below the end of micro wave 3 at 1,211.45. In the short term, if price moves above 1,228.47 (the low of micro wave 1) before making a new low, then subminuette wave c must be over and the next triangle subwave of minuette wave (d) upwards must be underway. At that stage, the alternate below may be invalidated.


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.

In the short term, subminuette wave iii must subdivide as an impulse. Micro wave 4 may not move into micro wave 1 price territory above 1,228.47 within subminuette wave iii.

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 more session. It would not exhibit a Fibonacci duration.


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

A triangle pattern looks to be forming. The trend lines are drawn across the top and bottom of the pattern. This is a fairly reliable continuation pattern.

Volume overall for the last four days is slowly increasing. This is opposite to what is normally seen during consolidation; normally, volume declines.

ADX is flat to declining indicating the market is correcting. ATR is now again increasing, so it now disagrees.

Apart from the outlier of 16th February, highest volume is for an upwards day. The 16th of February may include data for the holiday session of 15th February for which there is no daily candlestick in StockCharts data. If this candlestick for 16th February is ignored, then the breakout direction indicated by volume should be upwards.

If the volume for the daily candlestick of 16th February is taken into account. then the breakout direction indicated by volume should be downwards.

On Balance Volume may be providing an early indication. It has broken above all of its trend lines. OBV is often a reliable early indicator for price. This supports the Elliott wave count.

RSI is neutral. There is plenty of room for this market to rise or fall. Stochastics has returned from overbought.

This analysis is published @ 03:34 a.m. EST on 27th February, 2016.