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The main Elliott wave count yesterday expected more upwards movement to a target at 1,255 or 1,267.

So far price has moved higher as expected reaching 1,263.97.

Summary: The main wave count has a higher probability. It expects an upwards wave to end about 1,267. Thereafter, a second wave correction may begin which may last about one or two weeks. The alternate requires downwards movement from here, but today it has further reduced in probability because it no longer has the right look.

New updates to this analysis are in bold.

To see last weekly charts click here.


Gold Elliott Wave Chart Daily 2016
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Volume analysis favours this wave count, which is now more likely than the alternate.

Intermediate wave (2) may be a complete expanded flat correction. It would be a shallow 0.350 correction of intermediate wave (1) lasting 56 days, just one more than a Fibonacci 55. There would be no Fibonacci ratio between minor waves A and C. Minor wave C is a complete impulse.

Within intermediate wave (3), no second wave correction may move beyond the start of its first wave below 1,200.07.

The first wave up within intermediate wave (3) may now be very close to completion; the degree of labelling today within it is moved up one. When it is complete, then a following second wave correction should unfold and last about one to two weeks. If this wave count is correct, then the upcoming second wave correction may offer an opportunity to join the upwards trend at a good price.

At 1,582 intermediate wave (3) would reach 1.618 the length of intermediate wave (1).


Gold Elliott Wave Chart Hourly 2016
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The degree of labelling has been moved up one given the size of this movement now on the daily chart.

An impulse looks like it is unfolding upwards at both the daily and hourly chart levels. This increases the probability of this wave count over the alternate below.

There is no Fibonacci ratio between minute waves i and iii so far within the impulse. This makes it more likely that minute wave v will exhibit a Fibonacci ratio to either of i or iii. Minute wave v has passed equality in length with minute wave i. The next likely ratio is 1.618 the length of minute wave i which would be achieved at 1,267. If this target is too low and if price manages to reach above 1,269.07, then this main wave count would be confirmed by price and the alternate below would be invalidated.

Draw a channel about this upwards movement: draw the first trend line from the ends of minute waves i to iii then place a parallel copy on the end of minuette wave (ii) so that most upwards movement is contained. The lower edge of this channel perfectly showed where downwards movement found support, so the channel is reinforced.

Sometimes Gold exhibits swift strong fifth waves. Look out for this tendency here. If price breaks above the upper edge of this channel, then that would be what is happening. At that stage, targets may be too low. However, swift strong fifth waves for Gold are more commonly seen to end its third wave impulses and not often for its first wave impulses. Be aware of this possibility, but in this instance it is not the most likely scenario.

When minor wave 1 is complete, then a Fibonacci retracement may be drawn along its length. The 0.618 and 0.382 Fibonacci ratios would then be targets for minor wave 2 with the 0.618 Fibonacci ratio favoured.


Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

This wave count is now an alternate because volume and short term structure do not favour it at this stage. Further upwards movement today leaves this wave count with the wrong look: minute wave iv is now far too deep and large and looks like a five wave impulse and not a zigzag. Probability of this alternate is further reduced today. Probability is now very low.

Intermediate wave (2) may still be incomplete; minute wave v downwards may still be required to complete it. At 1,183 minor wave C would reach 1.618 the length of minor wave A.

Minor wave C may be an incomplete impulse. Minute wave iv may be over. If minute wave iv continues any higher, then it may not move into minute wave i price territory above 1,269.07. That must remain the final invalidation point for this wave count.

To the downside, intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,046.27.


Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

Minute wave ii was a quick deep 0.76 zigzag lasting 23 hours. Minute wave iv exhibits no alternation in structure with minute wave ii: both are zigzags. Minute wave iv no longer exhibits good alternation in depth because it is now relatively deep at 0.68 of minute wave iii.

The lack of alternation in structure reduces the probability of this wave count. The reduction in alternation in terms of depth reduces probability further.

Sideways movement labelled minuette wave (b) fits perfectly as a triangle. There is no Fibonacci ratio between minuette waves (a) and (c).

This wave count would be invalidated with a new high above 1,269.07. In the short term, both wave counts expect the same direction next: downwards movement. How low that wave down goes and its structure will indicate which wave count is more likely.



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

There is some increase in volume to support upwards movement today. This supports the main wave count over the alternate again.

Price found support at the 13 day moving average. This average usually provides reasonable support or resistance when Gold is trending.

ADX still is declining indicating the market is not yet trending. ATR is overall still flat, so these two indicators are still in agreement. However, they are both lagging as they are based on 14 day averages.

On Balance Volume offered a weak bullish signal with a break above the upper yellow horizontal line. A retest of that line was another bullish signal now that OBV has moved up and away from it. A new green line is drawn across the last two highs from OBV. A break above this line would be another weak bullish signal.

There is no divergence between price and RSI to indicate weakness in upwards movement. RSI is not yet extreme. There is room for price to rise further.

If this market is range bound as ADX and ATR suggest, then a range bound approach would expect a continuation of this upwards swing from here to end only when price finds resistance and Stochastics is overbought at the same time. Stochastics is not yet overbought.

This analysis is published @ 08:15 p.m. EST.