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The alternate Elliott wave count was invalidated.

There is only one Elliott wave count. The situation is clearer.

Summary: This correction may end in a few more hours about 1,224 – 1,226, or it may continue sideways for another two to three days. Price is finding resistance at the upper edge of the dark blue channel for a typical throwback.

New updates to this analysis are in bold.

Last published weekly chart is here.


Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

Intermediate wave (1) may be a complete impulse. Intermediate wave (2) may have begun. COT supports this wave count; the majority of commercial traders are currently short. While this does not pinpoint when price should turn, it does support a larger downwards trend about here.

Ratios within intermediate wave (1) are: there is no Fibonacci ratio between minor waves 1 and 3, and minor wave 5 is 2.95 points longer than equality with minor wave 1. This good Fibonacci ratio adds a little support for this wave count.

A movement at intermediate wave degree should begin with a five down on the daily chart. That is incomplete. Within minute wave iii, no second wave correction may move beyond the start of its first wave above 1,270.85.

It is extremely unlikely that intermediate wave (2) is over already, although the structure could be seen as complete. It has not breached the channel containing intermediate wave (1) and it should be expected to. It is far too shallow for the normal depth of a second wave, particularly the first second wave of a new trend. And finally, it is far too brief for an intermediate degree wave.


Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

There are still multiple structural possibilities for minuette wave (iv). Although I am labelling it as an expanded flat (because that is the most common structure), it may also be a combination or running triangle. Labelling on the hourly chart may change as the correction unfolds.

If minuette wave (iv) is an expanded flat, then within it subminuette wave b is a 1.4 length of subminuette wave a. This is slightly longer than the normal range of 1 to 1.38.

At 1,226 subminuette wave c would reach 1.618 the length of subminuette wave a. This is just $2 above the 0.236 Fibonacci ratio at 1,224 giving a $2 target zone with a reasonable probability.

If minuette wave (iv) is an expanded flat, then it may be over within the next 24 hours.

If minuette wave (iv) is a running triangle, then it may move sideways in an ever decreasing range for another two to three days.

If minuette wave (iv) is a combination, then the second structure in the double combination should unfold sideways over the next one to two days.

It looks like price may continue to find strong resistance at the lower edge of the blue channel. When channels provide support or resistance and are breached, and then price throws back to the trend line, it offers an excellent opportunity to join a trend. Stops may be set at the invalidation point or a little above the blue trend line, depending upon personal risk appetite (the risk with a stop above the trend line is price may overshoot the line before turning down). The closer price gets the the trend line the lower the risk is for an entry to the short side.

The next wave down for Gold for this wave count would be a fifth wave to complete a third wave. These can be swift and strong movements. Look out for this tendency, although it cannot be relied upon for a smaller movement during a counter trend second wave.


Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge. Chart courtesy of

Price continues to find resistance at the horizontal trend line about 1,225. This line should be expected to most likely hold. Price is showing a typical breakout followed by a throwback.

The last two days of small range movement have come with declining volume. Monday’s session has lighter volume for an upwards day. The rise in price is not supported by volume. This indicates this movement is a small countertrend movement. This supports the Elliott wave count.

ADX is declining indicating the market is not trending. ATR agrees as it is declining.

On Balance Volume indicated more downwards movement when it broke below the orange line and came back up to test it. OBV is bearish, which supports the Elliott wave count. The next line for support on OBV is the light blue line. Price may stop when OBV finds support at the blue line, when the next downwards movement in price unfolds.

RSI is still neutral. There is plenty of room for the market to move up or down.

Stochastcis is now entering oversold. In this instance, on the balance of all analysis, I will not give much weight to this indicator today. Although this is oversold, it does not mean price must turn up here. Price can still move lower and Stochastics can become more extreme before a low is found. If Stochastics offers divergence with price, then I would expect a trend change.

This analysis is published @ 06:59 p.m. EST.