GOLD Elliott Wave Technical Analysis

By: Lara Iriarte | Thu, May 1, 2014
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More sideways movement was expected, which is what has happened. However, a new low slightly below the invalidation point on the main hourly wave count was not expected.

Summary: It is most likely that Gold will remain range bound for another one or two days, with slightly higher movement.

This analysis is published about 6:10 p.m. EST, 30th April, 2014.

Main Wave Count.

Gold Daily Chart
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Gold is still within a large fourth wave correction at primary wave degree which is incomplete.

Primary wave 2 was a rare running flat. Primary wave 4 is unlikely to be a flat correction because it is likely to show structural alternation with primary wave 2.

Primary wave 4 is most likely to be completing as a double combination: zigzag - X - second structure. The second structure labeled intermediate wave (Y) is most likely to be a flat correction. Within the flat correction minor wave B must reach a minimum 90% the length of minor wave A at 1,201.98.

Overall the structure for primary wave 4 should take up time and move price sideways, and the second structure should end about the same level as the first at 1,434. Primary wave 4 may not move into primary wave 1 price territory. This wave count is invalidated with movement above 1,532.90.

Within intermediate wave (Y) minor wave B downwards is an incomplete corrective structure, and at this stage the structure fits best as an incomplete double zigzag. Minor wave B should continue for a few more weeks and may make a new low below 1,180, and is reasonably likely to do so in coming weeks.

Within the double zigzag of minor wave B we may be seeing alternation between minute waves w and y. Within minute wave w its A and C waves are somewhat close to equality (but not close enough to say they have an acceptable ratio of equality). Within minute wave y we may be seeing a ratio of 1.618 or 2.618 between its A and C waves, with its A wave being the shorter of the two.

Within minor wave B minute wave w lasted 11 days and minute wave x lasted 9 days. So far minute wave y has lasted 12 days and it still has a long way down to go. It looks like it will be longer lasting than minute wave w. It may last a total Fibonacci 21 or 34 days.

Gold Hourly Chart
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Minute wave x is still most likely complete as a single zigzag. Minute wave y has most likely begun. Minute wave y must subdivide as a zigzag to take price down to 1,201.98 or below.

Within the zigzag of minute wave y minuette wave (b) is still most likely incomplete and I will still expect to see a new high above 1,307.19 before it is over.

There are more than thirteen possible corrective structures a B wave may take, and they are the most difficult of all waves to analyse because there is so much variation between them.

Within minuette wave (b) subminuette waves a and b subdivide best as three wave structures, with subminuette wave b a 157% correction of subminuette wave a. This indicates an expanded flat may be completing.

Subminuette wave c may be either an impulse or ending diagonal. Ending diagonals require all their subwaves to be single zigzags. Micro wave 1 subdivides best as a zigzag so subminuette wave c is most likely an ending diagonal. The diagonal would most likely be contracting to end before 1,331.29.

Within the diagonal micro wave 2 moved lower and is now more likely to be complete. If it continues it may not move below the start of micro wave 1 at 1,268.62.

Minuette wave (b) may not move beyond the start of minuette wave (a) above 1,331.29.

Gold Hourly Chart 2
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I have considered all possible structures for minuette wave (b) which could possibly be complete. Yesterday I considered the possibility that it could be a highly unusual looking and rare running flat. That has an extremely low probability. I have also considered the possibility it may be a multiple W-X-Y, but that would be a double zigzag in which the second zigzag in the double would not have moved beyond the end of the first zigzag. That also has an extremely low probability.

Today I want to consider the possibility it may be a triangle.

If minuette wave (b) is a triangle then it would be a running contracting triangle: subminuette wave c ends below the end of subminuette wave a, and subminuette wave d ends before the end of subminuette wave b. The triangle subwaves all subdivide into single or double zigzags, with only one of the five being a multiple.

The problem with this possibility is the triangle does not have the right look; contracting triangles should have A-C and B-D trend lines which clearly converge (there is a perfect example on the daily chart). This example has an A-C trend line which barely slopes and is essentially flat. This cannot be a barrier triangle because they require the B-D trend line to be flat and the A-C trend line to slope.

For this reason this idea also has an extremely low probability.

In considering all possible structures for minuette wave (b) which could be complete I cannot see one which fits the subdivisions and has the right look. I must conclude that minuette wave (b) is incomplete, even though it is taking a lot longer than I had expected to unfold.

Alternate Wave Count.

Gold Alternate Wave Count Daily Chart
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I have moved the degree of labeling within minute wave x down one degree: the first zigzag upwards may not be minute wave x in its entirety and that may only be minuette wave (a) within minute wave x. Minute wave x may be continuing sideways as a flat correction.

Minor wave B downwards is still seen here as a double zigzag: zigzag - X - zigzag. The purpose of double zigzags is to deepen a correction when the first zigzag does not move price deep enough, so this structure would be able to take price down to 1,201.98 or below.

This alternate still has a lower probability than the main wave count because if minute wave x continues higher for a few days it would be substantially longer in duration than minute wave w. This would be unusual for an X wave within a double zigzag, and reduces the probability of this wave count.

There is no upper invalidation point because there is no minimum or maximum requirement for an X wave. However, X waves within double zigzags are normally shallow as this one would be. The only requirement is that an X wave be a corrective structure.

Gold Alternate Wave Count Hourly  Chart
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Within the possible flat correction minuette wave (b) is now a 117% correction of minuette wave (a), which indicates an expanded flat. At 1,355 minuette wave (c) would reach 1.618 the length of minuette wave (a).

If price reached up to 1,380.82 or above then I would relabel minor wave B in its entirety as a flat correction.

Minuette wave (c) must subdivide as a five wave structure, either an impulse or an ending diagonal. Minuette wave (c) may be an ending diagonal, which for this alternate wave count would most likely be expanding.

Within the diagonal subminuette wave ii may not move beyond the start of subminuette wave i below 1,268.62.

 


 

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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