GOLD Elliott Wave Technical Analysis

By: Lara Iriarte | Tue, Jan 28, 2014
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Yesterday's analysis expected more downwards movement which is exactly what has happened.

Summary: Price should continue to move lower overall with an increase in downwards momentum. The short term target at 1,217 may be met in one day, and the short / mid term target at 1,198 may be about two days away.

XAU/USD Daily Chart
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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.

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.

Movement above 1,277.97 has provided confirmation that primary wave 4 is not over. This upwards movement cannot be a fourth wave correction within primary wave 5 as it has now moved into what would be its counterpart first wave price territory. The wave down from the high labeled intermediate wave (W) to the low labeled intermediate wave (X) is now confirmed as a three wave structure. Primary wave 5 cannot subdivide as a three, it can only subdivide as a five.

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 flat. We can rule out a zigzag because the first wave subdivides as a three. This still leaves several structural possibilities.

Primary wave 4 is most likely to be a combination or triangle in order to show structural alternation with the running flat of primary wave 2.

The downwards wave labeled intermediate wave (X) is 99% the length of the upwards wave labeled intermediate wave (W). Primary wave 4 is unlikely to be a flat correction because if it were it would be a regular flat. These have similar behaviour and a similar look to running flats, and so there would be little structural alternation between primary waves 2 and 4.

Primary wave 4 is most likely to be a combination rather than a double zigzag because of the depth of intermediate wave (X). Double combinations take up time and move price sideways, and their X waves can be very deep. Double zigzags are different because their purpose is to deepen a correction when the first zigzag does not move price deep enough, so their X waves are not normally very deep. Thus intermediate wave (Y) is most likely to be a flat correction, and less likely a triangle and least likely a zigzag. It is most likely to end about the same level as intermediate wave (W) at 1,434 so that the whole structure moves sideways. It may last about 43 to 89 days, depending upon what structure it takes.

If intermediate wave (Y) is a flat correction then within it minor wave B must retrace a minimum of 90% the length of minor wave A, and it may make a new low below 1,180.84.

If intermediate wave (Y) is a flat correction then within it minor wave A must subdivide as a three wave structure. At this stage it looks like minor wave A may be unfolding as a zigzag because minute wave a within it completed as a leading diagonal which is a five wave structure. If minute wave b within this zigzag is over then at 1,314 minute wave c would reach equality in length with minute wave a.

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

XAU/USD 1-Hour Chart
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With the downwards structure becoming clearer I have adjusted the wave count slightly. I will discard yesterday's alternate as its probability has further decreased.

Minuette wave (c) is unfolding as a simple impulse, and within it subminuette waves i and ii are complete. Subminuette wave iii has begun and should move towards its middle within the next 24 hours. This should see some strong downwards momentum.

I have redrawn the accelleration channel about subminuette waves i and ii. I would expect subminuette wave iii to move below the lower edge of this channel, and any corrections along the way down should find resistance at the upper edge of the channel.

The target for minuette wave (c) is more likely to be at 2.618 the length of minuette wave (a) at 1,198. We may see another two red candlesticks yet for this target to be reached.

Within subminuette wave iii micro wave 2 may not move beyond the start of micro wave 1. This wave count is invalidated with movement above 1,261.92.

Alternate Daily Wave Count - Triangle.

XAU/USD Alternate Elliott Wave Daily Chart
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It is also possible that primary wave 4 may continue as a regular contracting (or barrier) triangle.

The expected direction 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.

Intermediate wave (C) must unfold as either a single or double zigzag. Within it no second wave correction, nor wave B of the zigzag, may move beyond the start of the first wave or A wave. This wave count is invalidated with movement below 1,180.84.

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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