GOLD Elliott Wave Technical Analysis

By: Lara Iriarte | Thu, Jul 10, 2014
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This analysis is published about 08:00 p.m. EST. 9th July, 2014


Despite all four hourly wave counts from yesterday's analysis being invalidated with movement above 1,324.86 I am still confident that the main wave count at the daily chart level is correct. I am still confident that minor wave B is incomplete. It is just the structure of minor wave B which is proving very difficult to analyze at the hourly level, which is normal for a B wave.

Summary: Upwards movement from the low at 1,308.63 simply does not subdivide as a five, so minor wave C cannot have begun there. I still expect one or two more days of sideways movement within this range before the breakout happens. When price breaks out it should be upwards.

Main Wave Count.

Gold Main Wave Count Daily Chart
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It is likely that only minor wave A is complete and sideways movement is an incomplete minor wave B. This wave count could see primary wave 4 last another two weeks to complete in a total Fibonacci 55 weeks which would be very satisfying analytically.

If minor wave B moved substantially lower it should find very strong resistance at the (B)-(D) trend line. A breach of this trend line would look very atypical and at that stage this main wave count would significantly reduce in probability, so much so I may discard it. However, I do not expect minor wave B to be deep; the deepest target I have for minor wave B to end is about the 0.382 Fibonacci ratio at 1,298.

Minor wave B may not move beyond the start of minor wave A below 1,240.61. Invalidation of this wave count at the daily chart level would provide full confidence in the alternate wave count.

B waves exhibit the greatest variety in form and structure of all waves. They are often very choppy, overlapping range bound movements which are extremely difficult to analyse. Flexibility in analysis is essential during B waves. I will focus in identifying the end of this sideways movement over one to two days. When it is done price should break out upwards.

Gold Main Wave Count Hourly Chart
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The one thing I am confident of today is stating minor wave B is very unlikely to be complete. If it is labeled as a single zigzag at the low of minute wave a at 1,308.63 that would be a remarkably brief minor degree wave. Movement up from that low does not fit as part of a new five wave structure; it can be seen as neither a leading diagonal nor an impulse. I cannot see how minor wave C could have begun there.

A wave count with minor wave B complete at the low of minuette wave (x) at 1,311.49 would not make sense. That structure would be labeled a double zigzag, but the second zigzag in the double would not have moved beyond the end of the first and ended substantially before that. This would be a highly unusual and weird looking double zigzag, which does not makes sense.

I have tried to see how minor wave B could be over at the low of subminuette wave b at 1,313.55 but I can see no complete corrective structure which fits that movement.

I must conclude that minor wave B is incomplete. I expect more sideways movement before it is done.

With upwards movement minor wave B may now be a flat correction. Minute wave b is most likely to be over now and is a 95% correction of minute wave a so this would be a regular flat correction.

Regular flats normally have C waves which are equal in length with their A waves. At 1,307.51 minute wave c would reach equality in length with minute wave a.

When the small best fit channel about subminuette wave c is breached by downwards movement then I would have confidence that minute wave b is over and minute wave c downwards has begun. Price movement below 1,321.69 would fully confirm it.

Within minute wave c no second wave correction may move beyond its start above 1,332.49.

Gold Main Wave Count Hourly Chart 2
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Minor wave B may also still be a regular contracting triangle. This wave count has the same subdivisions as the first wave count, but it expects only sideways movement and probably for longer than just one or one and a half days. This wave count could see minor wave B continue for a few days yet.

Gold Main Wave Count Hourly Chart 3
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This third wave count is identical to the first except for the degree of labelling of micro wave 5 within subminuette wave c. If we just move the degree of labelling there down one degree it is possible that minute wave b will move a little higher.

The normal length of B waves within flat corrections is between 100% to 138% the length of their A waves. This would be achieved for minute wave b between 1,333.61 to 1,343.10.

If minute wave b reaches up to 105% or higher of minute wave a at 1,334.86 or above then minor wave B would be an expanded flat correction. I would then expect minute wave c to be 1.618 the length of minute wave a which would see it $40.42 in length.

Unfortunately, this possibility illustrates that a new high above 1,333.61 is not necessarily a breakout with minor wave B still continuing. In more traditional technical analysis terms this would be termed a "false" breakout.

Alternate Wave Count.

Gold Alternate Wave Count Daily Chart
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Primary wave 4 may be a complete regular contracting triangle.

Intermediate wave (E) may have ended in just 20 days, one short of a Fibonacci 21. E waves of triangles are often short and brief, and this one looks reasonably typical.

Within primary wave 5 downwards no second wave correction may move beyond the start of its first wave above 1,333.61. Any movement above this point would immediately invalidate this wave count and clearly confirm the main wave count.

A clear breach of the (B)-(D) trend line would provide confidence in this alternate wave count. Thereafter, full confirmation would come with price movement below 1,240.61.

Gold Alternate Wave Count Hourly Chart
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While price continues to move sideways overall this wave count does not have a good fit. Sideways movement still looks much more like a typical B wave at this stage than a new downwards impulse. This wave count looks forced. I only publish it today because it expects a strong third wave downwards. Although this has a low probability, it is possible.

At 1,275 minute wave iii would reach 2.618 the length of minute wave i.

Minute wave iii should break below the lower edge of the pink base channel drawn about minute wave i and ii. If the lower pink trend line is breached that could be confirmation that a third wave is underway. Upwards corrections should find resistance at the upper pink trend line.

The truncated fifth wave for minuette wave (v) at the end of minute wave i significantly reduces the probability of this wave count.



Lara Iriarte

Author: Lara Iriarte

Lara Iriarte

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 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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