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May, 2016
May 16, 2016Gold, Gold Historical, Public Analysis
The main hourly Elliott wave count expected upwards movement for Monday from Gold, which is what
happened.
Price has made a higher high and a higher low on slightly increasing volume.
Summary: At the beginning of this week, the picture is not as clear as last week. The main wave count
expected stronger upwards movement. It still does, and the target remains at 1,477, but there is a very
real risk that this count is wrong and price may move substantially lower for a few weeks. Risk
remains at 1,237.97. If members have long positions, it is essential that risk is managed and stops are
used. Do not invest more than 3-5% of equity on any one trade and stops should be set just below
1,237.97. For profitable long positions, members may like to consider moving stops to break even to
remove the risk of losses if price moves strongly lower from here.
New updates to this analysis are in bold.
WEEKLY ELLIOTT WAVE COUNT
Within the second zigzag labelled cycle wave y, there is no Fibonacci ratio between primary waves A and C.
Primary wave C is an ending contracting diagonal which meets all Elliott wave rules.
For this downwards movement this is the only wave count that I have been able to see so far which meets all
Elliott wave rules. I remain aware that Elliott Wave International and Danerics have this downwards
movement as a five wave impulse which ends with a contracting diagonal for the fifth wave, but that wave
count violates the rule for wave lengths within a contracting diagonal. I will keep that wave count in mind,
but for now I do not want to publish a wave count which does not meet all Elliott wave rules as laid out in
Frost and Prechter.
Grand Super Cycle wave IV may not be a combination because the first wave subdivides as a multiple, and
the maximum number of corrective structures within a multiple is three. To label multiples within multiples
increases the maximum beyond three, violating the rule.
It may not be a zigzag because Super Cycle wave (a) subdivides as a three and not a five.
This leaves two groups of corrective structures: flats or triangles.
Within an expanded flat or running triangle, Super Cycle wave (b) may make a new high above the start of
Super Cycle wave (a) at 1,920.18.
Within a flat, Super Cycle wave (b) must retrace a minimum 90% of Super Cycle wave (a) at 1,833.71.
Super Cycle wave (b) may be any one of 23 possible corrective structures. First, a move of this size should
have a clear five up on the daily and weekly charts. That is still to complete. Within the first five up, no
second wave correction may move beyond its start below 1,046.27.
DAILY ELLIOTT WAVE COUNT
Minor wave Y may be a running contracting triangle. The triangle is supported by MACD hovering at the
zero line here on the daily chart.
Minor wave 2 may not move beyond the start of minor wave 1 below 1,237.97.
The next wave up for intermediate wave (3) should be swift and strong. It must move above the end of
intermediate wave (1) at 1,282.68. It must move far enough above this point to allow room for intermediate
wave (4) to unfold and remain above intermediate wave (1) price territory.
At 1,477 it would reach equality in length with intermediate wave (1). This target is reasonable because
intermediate wave (2) was very shallow.
If intermediate wave (2) is over as labelled, then it may have totalled a Fibonacci 34 sessions.
Minor wave 2 is 0.71 the depth of minor wave 1. Minor wave 1 lasted two days. Minor wave 2 lasted six
days. If it is over here, it would have good proportion and look like a clear three wave structure on the daily
and hourly charts.
If minor wave 2 continues lower for another one or two days, as per the first hourly alternate wave count, it
would still look reasonable in proportion to minor wave 1.
Gold often begins new trends slowly. There is a good example on this daily chart: the beginning of
intermediate wave (1) saw brief impulses and time consuming deep second wave corrections at minor,
minute and minuette wave degrees.
Golds impulses, particularly its third waves, normally accelerate at the middle and explode in a blowoff at
the end of the fifth wave.
All hourly charts today will show movement from the low labelled minor wave 2 at 1,257.24 on 10th
May.
HOURLY ELLIOTT WAVE COUNT
On Balance Volume, however, will work well with trend lines at the weekly chart level. A few examples
are drawn here:
On the week beginning 9th June, 2014, OBV broke upwards out of a consolidation. This preceded four
more weeks of upwards movement for a bear market rally.
On the week beginning 6th October, 2014, OBV broke above a resistance line. This was followed by a
new low for price and then a strong bear market rally. The consolidation zone here for OBV is not
clear.
On the week beginning 6th July, 2015, OBV broke below a clearly defined and long held consolidation
zone. This preceded two more strong downwards weeks for price.
On the week beginning 2nd November, 2015, OBV broke below a short support line delineating a
short consolidation. This was followed by more downwards movement from price.
On the week beginning 25th January, 2016, OBV broke above a small consolidation zone. This was
followed by several weeks more of strong upwards movement from price.
Now OBV is breaking below a reasonably long held and clearly defined consolidation zone. It would
be entirely reasonable to expect price to follow by continuing lower for a few weeks. This piece of
evidence strongly supports the alternate daily Elliott wave count.
Price has found resistance at the horizontal line about 1,310. The first support line may be about
1,225.
DAILY CHART
ADX is flat indicating the market is not currently trending and ATR agrees as it is declining. ADX
does not indicate a trend change: the +DX line remains above the -DX line.
On Balance Volume at the daily chart level is constrained within the two trend lines which are
converging. A break above the green line would be bullish. A break below the blue line would be
bearish. A bearish daily indication from OBV would switch this analysis strongly to bearish. A bullish
indication from daily OBV would be interpreted in conjunction with weekly OBV, but it would not
necessarily be strongly bullish.
RSI is neutral. There is room for price to rise or fall. There is currently no divergence between price
and RSI to indicate weakness in either direction.
Stochastics is neutral. There is room for price to rise or fall. A fall in price may end when Stochastics
reaches oversold.
This analysis is published @ 10:17 p.m. EST.
[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain
private.]