GOLD Elliott Wave Technical Analysis

By: Lara Iriarte | Mon, Dec 16, 2013
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Both the main and alternate hourly wave counts expected more upwards movement for Monday. The target for the main wave count was 1,251. So far it has been exceeded by 1.32.

Both wave counts remain the same and both remain valid.


Main Wave Count

Main Wave Count
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Gold is still within a large fourth wave correction at primary wave degree which is incomplete. To see a full explanation of my reasoning for expecting that primary wave 4 is not over and is continuing see this.

Primary wave 2 was a rare running flat correction, and was a deep 68% correction of primary wave 1. In order to show alternation in structure primary wave 4 may be a zigzag, double zigzag, combination, triangle or even an expanded or regular flat. We can rule out a zigzag because the first wave subdivides as a three. This still leaves several structural possibilities.

If primary wave 4 is a combination, expanded flat or running triangle then we may see a new low below 1,180.40 within it. This is why there is no lower invalidation point for intermediate wave (X).

If price reaches 1,205.74 then downwards movement labeled intermediate wave (X) would be 90% of upwards movement labeled intermediate wave (W). I would relabel primary wave 4 as an A-B-C flat correction. If price does not reach 1,205.74 then primary wave 4 is most likely a double combination.

Minor wave C must subdivide either as an ending diagonal or an impulse. It is clearly not an ending diagonal so it can only be an impulse. This impulsive structure is now almost complete; the final fifth wave downwards just needs to finish.

There was no Fibonacci ratio between minute waves iii and i within minor wave C. This makes it more likely we shall see a Fibonacci ratio exhibited between minute wave v and either of i or iii. At 1,159 minute wave v would reach equality in length with minute wave iii. At this stage this lower target allows enough room for minute wave v to complete.

Draw a parallel channel about minor wave C downwards with the first trend line from the highs labeled minute waves ii to iv, then place a parallel copy upon the low labeled minute wave iii. If it gets that low downwards movement should find support at the lower edge of this channel.

I would expect downwards movement to also find support at the lower edge of the parallel channel drawn here about intermediate wave (X).

Draw a parallel channel about the zigzag of intermediate wave (X): draw the first trend line from the start of minor wave A to the end of minor wave B, then place a parallel copy upon the end of minor wave A. When this channel is finally breached by upwards movement then I would consider that final confirmation that intermediate wave (Y) is underway.

Primary wave 4 may not move into primary wave 1 price territory. This wave count is invalidated with movement above 1,532.90.


Main Hourly Wave Count

Main Hourly Wave Count
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I have adjusted the wave count within the end of subminuette wave i after a more careful consideration of the hourly chart. It does not change the wave count at minuette wave degree.

Ratios within minuette wave (i) are: subminuette wave iii is 3.55 longer than 2.618 the length of subminuette wave i, and subminuette wave v has no Fibonacci ratio to subminuette waves iii or i.

Upwards movement looks very clearly like a three wave structure which is now complete. Within minuette wave (ii) there is no Fibonacci ratio between subminuette waves a and c.

Movement below 1,238.75 would invalidate the alternate hourly chart below, and provide some confidence for this main wave count.

I have drawn a parallel channel about minuette wave (ii). When this channel is clearly breached by downwards movement we shall have trend channel confirmation that minuette wave (ii) is over and minuette wave (iii) is underway.

At 1,175 minuette wave (iii) would reach 1.618 the length of minuette wave (i).

Minuette wave (iii) downwards should exhibit an increase in downwards momentum beyond that seen for minuette wave (i). It may take about a week to unfold.

Minuette wave (ii) may not move beyond the start of minuette wave (i). This wave count is invalidated with movement above 1,267.98.


Alternate Hourly Wave Count

Alternate Hourly Wave Count
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If we simply move the degree of labeling within the last wave down all up one degree then there may have been an intermediate degree trend change at 1,220.65, but if this is the case minute wave v would be truncated. This truncation reduces the probability of this wave count.

1-2-3 and A-B-C subdivide in exactly the same way. For this alternate upwards movement from the low may be 1-2-3. The following fourth wave may not move into first wave price territory below 1,238.75.

If price moves below 1,238.75 the probability of this wave count reduces further. It would be possible at that stage that a leading diagonal may be unfolding in a first wave position, but leading diagonals are not common; impulses for first waves are more common.

This alternate wave count requires confirmation with movement above 1,267.98 before I would have confidence in it.


Alternate Daily Wave Count - Triangle

Alternate Daily Wave Count - Triangle
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It is also possible that primary wave 4 may continue as a regular contracting (or barrier) triangle.

The expected direction and structure of this next upwards wave is the same, but for this alternate intermediate wave (C) of the triangle may not move beyond the end of intermediate wave (A). The triangle is invalidated with movement above 1,438.83.

The final intermediate wave (E) upwards may not move above the end of intermediate wave (C) for both a contracting and barrier triangle. E waves most commonly end short of the A-C trend line.

All five subwaves of a triangle must divide into corrective structures. If this next upwards movement subdivides as a zigzag which does not make a new high above 1,438.83 then this alternate would be correct.

Triangles take up time and move price sideways. If primary wave 4 unfolds as a triangle then I would expect it to last months rather than weeks.

 


 

Lara Iriarte

Author: Lara Iriarte

Lara Iriarte
elliottwavegold.com

Lara Iriarte

Elliott wave is one of the more difficult and complicated technical analysis tools. When done right it can be uncannily accurate.

I have been using the Elliott wave principle to analyse up to five markets a day since 2008. I began Elliott Wave Forex (originally ForexInfo.us) in 2009 to provide daily analysis of EURUSD and GBPUSD, then I began Elliott Wave Stock Market in 2010. Elliott Wave Gold began in August, 2013. Currently I provide daily analysis of Gold on this site, and daily analysis of the S&P 500 on Elliott Wave Stock Market for its members.

I have a science background (BSc) which has trained me to think logically and be evidence focussed. Over the years I have seen no market movement which does not fit into the clear and restrictive rules for Elliott wave structures.

I have members who are fund managers, institutional investors and professional traders.

If you want to learn how to apply the Elliott wave principle to any market my analysis service is designed to teach you, daily, how to do this.

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