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, I’ve 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. Today’s 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.