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Upwards movement was expected from last analysis, but this looks to be too weak to be a breakout.

Summary: One final short wave down to about 1,220 should complete a fourth wave triangle. The next move for Gold should be a short sharp thrust up and out of the triangle which is likely to be about $34 in length. The next likely length would be $55.

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.

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 very close to completion. 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.

Gold often exhibits very short quick fifth waves after its fourth wave triangles. If this tendency is seen for minute wave v, then it would most likely be about $34 in length to be equal with minute wave i, a common ratio for a fifth wave. If upwards movement keeps going after that first length is reached, then the next likely length would be about $55 where minute wave v would be 1.618 the length of minute wave i.

Extend the triangle trend lines outwards. The point in time at which they intersect often sees a trend change, which would be 8th March. This does not always work, but it works often enough to be something to look out for.

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.

Only one of the triangle subwaves may be a more complicated double. Within this triangle, minuette wave (b) will only subdivide as a double zigzag, so all remaining subwaves of this triangle must be simple A-B-C structures.

Minuette wave (e) is continuing lower and sideways as a longer lasting zigzag. This triangle is incomplete; it has not managed to complete in a Fibonacci thirteen days.

Within minuette wave (e), subminuette wave a continued a little lower to complete a five wave impulse. Subminuette wave b upwards now fits as a complete zigzag.

Triangles normally fit neatly within their trend lines, which are often tested as the triangle unfolds. If my labelling of subminuette wave b as complete is wrong and if price moves higher, then expect it to find very strong resistance at the upper green (b)-(d) triangle trend line. If that trend line is breached and upwards movement shows an increase in momentum, then expect the triangle is over. That would be confirmed with a new high above 1,248.44. At that stage, minuette wave (e) could not be continuing higher because it may not move above the end of minuette wave (d).

At this stage, it looks most likely that subminuette wave b is a complete zigzag. At 1,220 submineutte wave c would reach equality in length with subminuette wave a.

The pink trend line from the daily chart may again be touched about that price point. That line should offer strong support.

Minuette wave (e) would most likely fall short of the green (a)-(c) triangle trend line. If it does not fall short, then the other less likely point for it to end is with an overshoot of that line.

Draw a small channel about the zigzag of minuette wave (e). Draw the first trend line from the start of subminuette wave a to the end of subminuette wave b, then place a parallel copy on the end of subminuette wave a. Price may find strong support at the lower edge of that orange channel.

Fifth waves out of Gold’s fourth wave triangles are often surprisingly short. I do not want to be surprised again by this tendency. The most likely length for minute wave v would be equality with minute wave i about $34. This would see minute wave v surprisingly short. If price keeps rising after a $34 length, then the next length would be $55.

When there is some upwards movement within minute wave v, then draw a trend line along the lower edge. When that trend line is clearly breached, if the length is about $34, then it may be over. Minute wave v may last only one or two days.

There is a competing tendency for Gold to exhibit long strong fifth waves to end its third wave impulses. Minute wave v may be a strong extension as it is a fifth wave to end a third wave impulse, but in this instance I think the tendency for it to be short and quick following a triangle is stronger.


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.

At this stage, if minute wave iv is continuing as a zigzag, then minuette wave (b) within it may be a triangle. This wave count no longer has the right look at the daily chart level. A single zigzag for minute wave iv should not have taken this long to unfold and it would be much longer in duration than the single zigzag for minute wave ii which lasted seven daily candlesticks. While a triangle could be expected to be longer lasting a zigzag should not be.

This wave count has a low probability, but alternates should always be considered for triangles. A new low below 1,211.45 would invalidate the main hourly wave count and confirm this alternate.

At that stage, minute wave iv may be expected to end about the 0.382 Fibonacci ratio at 1,184.

Within the triangle of minuette wave (b), the final wave for subminuette wave e may not move beyond the end of subminuette wave c above 1,248.44.

For this alternate, the triangle for minuette wave (b) would now be over with subminuette wave e falling just short of the a-c trend line. A short sharp downwards wave for minuette wave (c) would now be expected.


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. The breakout should be up. If price breaks above the upper green line on a day with an increase in volume, that would be a classic breakout from this pattern.

A decrease in volume now overall for the last few days again gives this consolidation a more typical look.

ADX is flat to declining indicating the market is correcting. ATR is now flattening off, so it now agrees with ADX.

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 broke above the green and dark blue lines. This is a bullish signal; the direction of a break out of trend lines by OBV often predicts the direction price will break out of a consolidation. I have added a new trend line today to OBV in pink. A break above this line would be further bullish indication by OBV.

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

This analysis is published @ 07:06 p.m. EST.