Select Page

More sideways movement with a small inside day fits all four Elliott wave counts at this stage.

Summary: Gold remains in a sideways consolidation phase which began on March 27th. Since price entered the consolidation phase the strongest volume is on down days, indicating that when the breakout comes it may be more likely to be down than up. Volume continues to decline, which often happens towards the end of a consolidation phase. However, the Elliott wave picture remains unclear.

A new high above 1,209.30 would invalidate wave count 1 at this stage.

A new low below 1,184.04 would invalidate wave counts 1, 2 and 3 at this stage. That would leave only wave count 4 as valid.

A new high above 1,224.35 would invalidate wave counts 1 and 4, leaving wave counts 2 and 3 valid.

Click on charts to enlarge.

To see weekly charts for bull and bear wave counts go here. Wave counts 1 and 2 follow the weekly bull count, wave counts 3 and 4 follow the weekly bear count.

Wave Count #1

Gold Elliott Wave Chart Daily 2015

So far within cycle wave b there is a 5-3 and an incomplete 5 up. This may be intermediate waves (A)-(B)-(C) for a zigzag for primary wave A, or may also be intermediate waves (1)-(2)-(3) for an impulse for primary wave A. Within cycle wave b primary wave A may be either a three or a five wave structure.

Intermediate wave (A) subdivides only as a five. I cannot see a solution where this movement subdivides as a three and meets all Elliott wave rules. This means that intermediate wave (B) may not move beyond the start of intermediate wave (A) below 1,131.09. Intermediate wave (B) is a complete zigzag. Because intermediate wave (A) was a leading diagonal it is likely that intermediate wave (C) will subdivide as an impulse to exhibit structural alternation. If this intermediate wave up is intermediate wave (3) it may only subdivide as an impulse.

At 1,320 intermediate wave (C) would reach equality in length with intermediate wave (A), and would probably end at the upper edge of the maroon channel. At 1,429 intermediate wave (C) or (3) would reach 1.618 the length of intermediate wave (A) or (1). If this target is met it would most likely be by a third wave and primary wave A would most likely be subdividing as a five wave impulse.

Within intermediate wave (C) minor wave 2 is seen as a double combination: zigzag – X – triangle. The triangle for minute wave y would be about only halfway through.

Pros:

1. Combinations are reasonably common structures.

2. On the daily chart MACD is hovering at zero. This sideways chop of the last 11 days does look like a possible triangle.

3. The upwards wave labelled minute wave x does look like a three on the daily chart.

Within the triangle of minute wave y minuette wave (c) may not move beyond the end of minuette wave (a) below 1,184.04.

If minute wave y is a contracting triangle then minuette wave (d) may not move beyond the end of minuette wave (b) above 1,209.30.

If minute wave y is a barrier triangle then minuette wave (d) should end about the same level as minuette wave (b) at 1,209.30, as long as the (b)-(d) trend line is essentially flat. In practice this means that minuette wave (d) may end slightly above 1,209.30. This is the only Elliott wave rule which is not black and white.

For this wave count 1 I would expect sideways choppy movement for much of this week. The breakout would be expected to be upwards.

Volume continues to decline indicating Gold is still in a consolidation phase which is nearing maturity. If the breakout is upwards is should come with a substantial increase in volume for an up day when it happens.

GOLD Elliott Wave Chart 2015

The hourly charts today will all show movement since the low at 1,184.04.

This first wave count sees movement since 7th April as a regular contracting or regular barrier triangle. Only waves (a) and (b) are complete, and both subdivide best as single zigzags. This means that one of the remaining sub waves should subdivide into a more complicated and time consuming double, or possibly a triangle to complete a nine wave triangle.

The final wave of the triangle for minuette wave (e) would be most likely to undershoot the (a)-(c) trend line, and less likely to overshoot the (a)-(c) trend line.

Upwards movement for the small green candlestick of Wednesday’s session subdivides as an incomplete double zigzag. For wave count 1 this would be subminuette wave b within the zigzag of minuette wave (c) of the triangle.

Within the zigzag of minuette wave (c) subminuette wave b may not move above the start of subminuette wave a at 1,209.30. This invalidation point will be black and white for the next 24 hours.

Minuette wave (c) of a contracting or barrier triangle may not move beyond the end of minuette wave (a) below 1,184.04. This invalidation point will remain black and white while the triangle is completing.

Wave count 1 expects the most sideways movement, and the breakout for this idea may not come until next week.

Wave Count #2

Gold Elliott Wave Chart Daily 2015

This wave count is identical to wave count #1 up to the high labelled minor wave 1. Thereafter, instead of minor wave 2 continuing it sees minor wave 2 as complete, within minor wave 3 minute waves i and ii complete, and now within minute wave iii minuette waves (i) and (ii) are also complete.

Pros:

1. Minute wave ii looks like a clear three wave movement now on the daily chart.

2. Minor wave 3 should show its corrections for minute waves ii and iv clearly on the daily chart.

Cons:

1. Minute wave ii clearly and strongly breaches the lower edge of a base channel drawn about minor waves 1 and 2, one degree higher.

2. Minute wave ii is twice the duration of minor wave 2 one degree higher.

3. The upwards wave of minute wave i looks like a three on the daily chart, but it should be a five.

4. If the middle of a third wave began on Wednesday it should be associated with higher volume, but volume for Wednesday is lower.

Within minute wave iii no second wave correction may move beyond its start below 1,184.04.

GOLD Elliott Wave Chart 2015

Minute wave iii should be beginning to show a strong increase in upwards momentum and an increase in volume. It is not really showing much increase in upwards momentum, and it is showing declining volume. This is an indicator that wave count 2 is likely wrong.

So far within minuette wave (iii) a series of overlapping first and second wave corrections may be complete.

Alternatively, minuette wave (ii) may not be over and could continue sideways as a double flat or double combination. The invalidation point is left at 1,184.04 to reflect this possibility, which could explain the lack of volume.

At 1,304 minute wave iii would reach 1.618 the length of minute wave i.

Minuette wave (ii) may not move beyond the end of minuette wave (i) below 1,184.04.

Wave Count #3

Gold Elliott Wave Chart Daily 2015

This wave count follows the bear weekly count which sees primary wave 5 within cycle wave a as incomplete. At 957 primary wave 5 would reach equality in length with primary wave 1.

This wave count is today adjusted to see minor wave 2 as an incomplete zigzag, and within minute wave b a close to complete running contracting triangle.

When the triangle is complete then the zigzag for minor wave 2 should end with a small wave up for minute wave c. It should find strong resistance at the upper edge of the maroon channel copied over here from the weekly chart. If this maroon trend line is breached again by a full daily candlestick above it and not touching the maroon trend line then this bear wave count should be discarded.

Pros:

1. The upwards waves of minuette waves (b) and (d) do look like threes on the daily chart. A triangle nicely explains the sideways chop of the last 18 days.

2. MACD supports the idea of a triangle unfolding as it is hovering at the zero line on the daily chart.

3. Volume supports the idea of a triangle (a typical consolidation phase normally sees declining volume towards its end).

Cons:

1. Minor wave 2 would be much longer in duration than a minor degree second wave normally is for gold.

The triangle of minute wave b may be almost complete. Thereafter, an upwards breakout for minute wave c would be extremely likely to move price at least slightly above the end of minute wave a at 1,219.99 to avoid a truncation. Minute wave c may be 0.618 the length of minute wave a at 48 in length. It is possible that minute wave c may end above 1,219.99 but below 1,224.35, giving a “false breakout” before a downwards trend begins with strength. Minute wave c does not have to make a new price extreme beyond the running triangle of minute wave b to avoid a truncation, and only needs to move beyond the end of minute wave a.

Minor wave 2 may not move beyond the start of minor wave 1 above 1,308.10.

Gold Elliott Wave Chart Hourly 2015

Within the triangle one of the sub waves is already a more time consuming complicated double, so the final wave of minuette wave (e) is likely to be a simple zigzag.

Within the final zigzag of minuette wave (e) subminuette wave b may not move beyond the start of subminuette wave a above 1,209.30.

Minuette wave (e) may not move beyond the end of minuette wave (c) below 1,184.07.

Minuette wave (e) would be most likely to undershoot the (a)-(c) trend line, but it may also overshoot the (a)-(c) trend line.

This third wave count still expects to see more choppy overlapping sideways movement for another day or so as minuette wave (e) takes its time. The zigzag for minuette wave (e) should be a clear obvious three wave structure. Within it subminuette wave b should find strong resistance at the upper (b)-(d) trend line (green) of the triangle (triangle trend lines normally provide strong support and resistance while a triangle is unfolding).

Subminuette wave b is an almost complete double zigzag. Only one more high is needed to complete the second zigzag in the double.

Thereafter, subminuette wave c downwards should unfold as a five wave structure, and is extremely likely to make at least a slight new low below the end of subminuette wave a at 1,191.48 to avoid a truncation.

Wave Count #4

Gold Elliott Wave Chart Daily 2015

This wave count is identical to wave count 3 up to the low labelled minor wave 1. Thereafter, it still sees minor wave 2 as a completed zigzag, and minor wave 3 in its very early stages.

Minute wave ii is seen as a completed double combination.

Pros:

1. The proportion of minute wave ii looks right.

2. Upwards movement continues to find resistance at the upper edge of the blue base channel drawn about minor waves 1 and 2.

3. It is very common for a third wave to begin with a series of overlapping first and second waves.

4. If Tuesday’s session is a small correction within a downwards trend then it should have lower volume.

At 1,059 minor wave 3 would reach equality in length with minor wave 1.

Gold Elliott Wave Chart Hourly 2015

The blue base channel is copied over to the hourly chart. Upwards movement perfectly ends when price touched this trend line. For wave count 4 use this trend line to show where minuette wave (ii) should end. If price gets that high it should again find strong resistance at that blue line.

Minuette wave (ii) for wave count 4 should show up on the daily chart. For Gold, within its extended third waves, the second and fourth wave corrections normally show on the daily chart so that the third wave impulse has a clear five wave look to it. Minuette wave (ii) is an almost complete double zigzag.

When minuette wave (ii) is complete then this wave count expects the middle of a third wave to begin to develop an increase in downwards momentum. A new low below 1,184.04 would now provide a reasonable amount of confidence in this wave count.

If I had to pick a winner it would still be wave count 4. However, it has too many problems for me to have confidence in it. I would wait for price to indicate which count is correct.

This analysis is published about 05:34 p.m. EST.