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A correction was expected to continue. The small red candlestick for Tuesday’s session fits both Elliott wave counts.

Summary: A correction is still unfolding and should continue sideways. The correction may include a new high above 1,279.45. It is most likely a fourth wave at minor degree and may end in a further six or eleven days. Within the correction, a B wave upwards may make a new high.

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.

Friday’s upwards movement may have completed minor wave 3.

Ratios within minor wave 3 are: there is no Fibonacci ratio between minute waves iii and i, and minute wave v is just 0.07 short of 1.618 the length of minute wave i.

Minor wave 2 was a very deep 0.97 double zigzag lasting nine days (one more than a Fibonacci eight). Given the guideline of alternation, minor wave 4 may be expected to be a longer lasting sideways structure such as a flat, combination or triangle. It may last a Fibonacci thirteen days most likely. If it is a triangle, it may take longer, perhaps a Fibonacci twenty one days.

Minor wave 4 may end within the price territory of one lesser degree. Minute wave iv has its range from 1,261.94 to 1,190.9. The most likely target for minor wave 4 would be the 0.236 Fibonacci ratio at 1,207 as it lies within this range.

The triangle trend lines now cross over on 10th March. A trend change may be seen on this date. It does not have to be the end of minor wave 4. It may only be the end of minute wave a or b within it.

So far price is finding strong support at the lilac trend line. This may continue to provide support. If that is the case, then this correction may be very shallow.

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

There are several structural possibilities for minor wave 4. It may be a flat, combination or triangle most likely to exhibit alternation with the double zigzag of minor wave 2. The labelling will change as this correction unfolds and as the structure becomes clearer. It is still impossible at this early stage to tell which of 20 possible structures is unfolding.

The labelling for this correction works in the same way for the main and alternate wave counts at the hourly chart level. These are just two possibilities which can be seen at this stage.

The correction may be unfolding as a flat or triangle, and for both of these structures wave A should be a three. Minute wave a may be an incomplete double combination which is classified as a three.

Within the combination, the first structure of minuette wave (w) is a zigzag. The double is joined by a three in the opposite direction, an expanded flat labelled minuette wave (x). The second structure of minuette wave y may be a flat or triangle. Subminuette wave b within minuette wave (y) is over 0.9 of subminuette wave a, so it has met the minimum requirement for a flat correction. Subminuette wave b is 1.36 times the length of subminuette wave a, just within the normal range of 1 – 1.38. At 1,256 subminuette wave c would reach 1.618 the length of subminuette wave a. This would complete a three wave structure for minute wave a.

When minute wave a is a completed three wave structure, then minute wave b upwards should unfold. If minor wave 4 is to be a flat correction, then minute wave b will have a minimum requirement of 0.9 the length of minute wave a. If minor wave 4 is to be a triangle, there is no minimum nor maximum for minute wave b within it.

Minute wave b may make a new high above the start of minute wave a at 1,279.45, for both a triangle and flat, as in an expanded flat (a very common structure) or a running triangle.

The structure of the correction cannot yet be seen as complete.


Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

This alternate wave count has a low probability. It is published to consider all possibilities. Price needs to move strongly higher in the next 24 hours for this alternate to now have the right look. If that does not happen, then this alternate may be discarded.

By simply moving the degree of labelling within minute wave v down one degree, the upwards movement that ended on Friday may be only the first wave within minute wave v.

Minute wave v may be extending.

At 1,350 minute wave v would reach 0.618 the length of minute wave iii.

Downwards movement for Friday found support at the lilac trend line.

Minor wave 3 may end on 10th March, if it ends when the triangle trend lines cross over.

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

A flat correction may be unfolding sideways. This idea works in the same way for both this alternate and the main hourly wave counts. For the main hourly wave count, the flat correction would be only minute wave a within a larger more time consuming structure for minor wave 4.

If a flat correction is unfolding, then subminuette wave a is a complete zigzag. Subminuette wave b would now be a complete double combination which has retraced 0.93 the length of subminuette wave a. This would be a regular flat correction.

Subminuette wave c now looks like it may be complete, but if it is over here it would have ended with a 2.64 truncation. This is not technically a running flat (a very rare structure) because subminuette wave b did not move beyond the start of subminuette wave a. But the truncation does reduce the probability for this wave count.

I am labelling minuette wave (ii) as complete despite the truncation because for this alternate wave count it really should be over now. It should not take much longer than this for a correction at a low degree to complete within a strong extended fifth wave. Because of the truncation the possibility that micro wave 5 within subminuette wave c will continue lower must be accepted.

Minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,224.70.


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

Two things on this chart strongly indicate upwards movement is over for now for Gold: the volume spike for Friday and strong divergence between price and RSI.

Gold often ends its fifth waves on a sharp movement with a volume spike. Friday’s volume spike looks typical. That volume is for a downwards day which further reinforces the idea that more downwards movement is now ahead for Gold. The fall in price was supported by volume on Friday.

Two days in a row of small sideways movement to complete small candlesticks comes with declining volume. This movement looks typically corrective. As a correction unfolds, volume normally declines.

ADX has caught up with the trend. It is indicating there is an upwards trend in place. This is a lagging indicator.

ATR disagrees today as it is declining.

On Balance Volume found resistance and turned down at the pink line. Look for OBV to find support at the blue line; this line is almost horizontal, repeatedly tested and long held. It should offer fairly strong support.

Stochastics is returning from overbought and RSI is returning from almost overbought.

This analysis is published @ 08:07 p.m. EST.