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Yesterday’s main Elliott wave count expected downwards movement, but this has not happened.

Classic technical analysis will be used today to judge the probability of the main vs. alternate Elliott wave counts.

Summary: A lack of support from volume today is very concerning for any bullish outlook. While this could change quickly, the evidence today is still more bearish than bullish. A bear flag pattern still looks like it is finishing. In the short term, an Elliott wave target for upwards movement to end is at 1,281 – 1,283. Thereafter, a downwards trend is expected to resume. The next wave down is expected to be a fifth wave, and these can be swift and strong for Gold. A new high above 1,306.70 would confirm the alternate Elliott wave count.

New updates to this analysis are in bold.

Grand SuperCycle analysis is here.

The last published monthly chart may be seen here.

To fit daily charts into the bigger picture see last analysis of weekly charts here.


Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

The movement up from the low of 1,046 on the 3rd of December, 2015, subdivides 5-3-5. Current downwards movement is too deep to reasonably be considered a second wave correction (that idea has been discarded based upon an exceptionally low probability), so the movement up from 1,046 is seen as a complete zigzag. This may be either the entirety of a correction, or it may be the first zigzag in a double zigzag. This main wave count looks at it as an entire correction.

If there has been a trend change at a large degree at the last high, then what looks like a rather obvious triangle must be ignored. It is possible that a series of three overlapping first and second wave corrections has unfolded, but this does look less likely than a triangle.

The triangle may not be labelled as a second wave because second waves do not take the form of triangles.

This wave count is reverted to see minor wave 3 incomplete and minute wave iv within it now unfolding. There is no Fibonacci ratio between minute waves i and iii.

Minute wave iv may not move into minute wave i price territory above 1,306.70.

Minute wave ii was a deep 0.81 zigzag lasting four days. At this stage, minute wave iv may be seen as either a regular flat correction or a zigzag, depending upon how the structure of minuette wave (a) is seen. Minuette wave (a) fits best and looks like a five, so minute wave iv may be unfolding as a zigzag. The probability of this wave count is slightly reduced because a zigzag would be the least likely structure for this correction to be. It remains viable because alternation is a guideline not a rule. Minute wave iv still exhibits alternation in depth.

The pink channel is removed today because this fourth wave is not contained within it. A small channel is drawn about minute wave iv using Elliott’s technique for a correction. Price is finding resistance about the upper edge. If price breaks through the lower edge, then the correction for minute wave iv would most likely finally be over.


Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

The structure of minute wave iv is today relabelled. This movement now fits best as a zigzag. So far it is 0.33 the length of minute wave iii. It may end closer to the 0.382 Fibonacci ratio at 1,281. At 1,283 minuette wave (c) would reach 1.618 the length of minuette wave (a). This gives a $2 target zone with a reasonable probability.

At any stage, a new low now below 1,260.95 would invalidate the alternate at the hourly chart level and provide some confidence in this main wave count.

Minute wave iv may not move into minute wave i price territory above 1,306.70.


Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

What if the zigzag upwards from the low of 1,046 on the 3rd of December, 2015, is only the first zigzag in a double?

There is no rule stating a limit for X waves within double zigzags or double combinations. To achieve the purpose of a double zigzag, which is to deepen a correction, their X waves should be relatively brief and shallow. It would be highly unusual and defeat the purpose if primary wave X moved beyond the start of intermediate wave (C) of primary wave W below 1,200.07. This wave count should be discarded below that point.

Primary wave X is seen as a zigzag. Within primary wave X, intermediate wave (B) fits neatly as a triangle. This is supported by MACD hovering about zero as it unfolded. Any wave count which sees a triangle in this position should have a higher probability than a wave count which does not.

The zigzag downwards for primary wave X may be complete, at all time frames. A target for primary wave Y upwards would be about 1,569 where primary wave Y would be about even in length with primary wave W.

So far, within the five up for intermediate wave (A), minor waves 1 and 2 may be complete. Within minor wave 3, minute waves i and now ii may also be complete.


Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

Minor wave 3 must move far enough above the end of minor wave 1 at 1,264.72 to allow room for a subsequent fourth wave correction to unfold and remain above first wave price territory. It still has not done that. The conclusion for this alternate wave count must still be that minor wave 3 is incomplete.

So far, within minor wave 1, a five wave impulse upwards is complete and this is labelled minute wave i.

Now a following three wave structure downwards looks to be also complete, falling just short of the 0.618 Fibonacci ratio at 1,259. This may be a zigzag for minute wave ii.

At 1,305 minor wave 3 would reach 1.618 the length of minor wave 1.

Within minute wave iii, the first wave up of minuette wave (i) is close to completion. When minuette wave (i) is done, then minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,260.95.

At 1,569 primary wave Y would reach equality in length with primary wave W.



Gold Weekly 2016
Click chart to enlarge. Chart courtesy of

An upwards week shows a further decline in volume. This supports the main bearish Elliott wave count.

Two small range weeks in a row have moved price sideways and slightly higher. This looks like a small consolidation at this stage and not necessarily a new upwards trend.

On Balance Volume remains constrained within support and resistance lines.

The divergence noted with yellow lines between price and RSI at the last two swing lows is bullish. It indicates weakness in price. This supports the alternate Elliott wave count.


Gold Daily 2016
Click chart to enlarge. Chart courtesy of

It is very concerning for any bullish outlook that the reasonable upwards movement from price is not supported by volume today. For an upwards trend to be healthy and sustainable it requires active buyers to push price up. So far this is not happening.

This could change if we see an upwards day with stronger volume, but so far that has not happened. We can only make a judgement on the evidence that is available, not on what we think might happen.

Price has found resistance today at the upper flag trend line. With volume still light and declining, it still looks like this choppy movement of the last 12 sessions is a consolidation, and it still looks like a bear flag pattern. During this pattern, it is still two downwards days which have strongest volume.

On Balance Volume is still constrained within resistance and support.

ADX is declining, indicating the market is not trending. ATR is still overall declining; although it slightly increased today, one day is not enough to indicate a trend. Bollinger Bands are still sharply contracting. This upwards movement still does not look like a normal healthy trend.

This consolidation is bringing RSI back closer to neutral. Stochastics is also moving through neutral. There is again plenty of room for price to fall.

The longer term 200 day moving average still is increasing. The larger trend may still be up.

The mid term Fibonacci 55 day moving average is still declining, and the shorter Fibonacci 13 day average is below it. The mid term trend may still be down.

This analysis is published @ 10:13 p.m. EST.