Elliott Wave Analysis of Gold (XK futures contract) by Sid from ElliottWavePredictions.com

Gold Comments Off

Mar 06 2015

Elliott Wave Analysis of Gold (XK futures contract) by Sid from ElliottWavePredictions.com. Click on the charts to enlarge.

As many who follow my work know, Ive been singing a bullish tune on Gold ever since I counted the terminal downward thrust from the burgundy X wave triangle complete in November 2014. As the weekly chart below shows, initially from that November 7 low, Gold jumped about 15% to the upside, but since topping on January 21, Gold has been in the process of largely retracing that initial surge. Todays downside continuation appears to have scared a number of longs out of the market, but based on several technical factors, I will remain quite bullish on Gold as long as it does not take out $1132 to the downside.

As shown on the daily chart below, the thrust from the burgundy X triangle (starting July 14, 2014) took the required form of a black ABC, and appears to have bottomed on November 7 as at least the 18-month cycle trough in Gold, and possibly the 4.5-year cycle trough, depending on how far back one starts the Hurst analysis. Once that low was in, Gold rallied and broke through a trendline extending from the October 2012 and July 2014 highs.

Upon examination of the intraday price action on the 360-minute chart below, upward movement from the November 6 low appears to carve out the proper ABC subdivisions within each leg of a  leading expanding diagonal. Also, wave 3 was longer than 1, 4 was longer than 2, and 5 was longer than 3. Additionally, wave 5 of the diagonal rallied strongly, but fell just short of tagging a line extending from the extremes of waves 1 and 3.  This is textbook expanding diagonal price action.  Then, from the January 21 high, downward movement is clearly choppy and overlapping. In my opinion, it counts best as a WXYXZ triple zigzag, nearly complete. Hurst cycle analysis is expecting a 20-week cycle trough to form here in early March.  Since leading diagonals are typically deeply retraced, recent downward movement still fits within this wave count nicely.

One final note: Because the November low is very likely at least an 18-month cycle trough, Gold should generally move sideways and upward through about the mid-point in the next 18-month cycle. That means that Gold, Silver, and the miners are likely hold up nicely through August 2015, even if $1132 is taken out slightly to the downside.