Update On Gold

Based on the long-term chart of Gold using six-monthly bars we can not specifically say whether we are in a triangular fourth wave, or possibly an ending-diagonal fifth wave. That is the phenomenon often referred to and often written about here as The Fourth Wave Conundrum that happens at every degree of trend. However, based on channel analysis it is possible to sketch out a reasonable scenario for the triangle as we showed in our comments in this post (Mar 14th: LINK see comment at 9:32 am).

The basic reasoning is that when a third wave, III, extends then prices tend to form a channel. If so, based on the amount of 'time' wave II consumed, then wave IV might look to take as much or more time. So, a triangle might fit the bill. Further, an expanded flat correction would likely have the risk of overlapping wave Cycle I.

And, if that is the case, then based on degree labeling. what was known at the time and waves I counted, this monthly count seems to work quite well.

Notice, there is another smaller upward channel. This suggests that all waves in the channel belong to the same set of wave structures. Thus, the waves can be counted as a triple zigzag upward with a (Z) wave truncation at the high. As I have repeatedly suggested (Z) waves are prone to truncation, and this one may have. 

Yet, we do not know that upward movement is over without a lower monthly low on the chart. So, we must also recognize it is dangerous in Elliott Wave to count a triple zigzag upward without also recognizing that it might be the impulse equivalent of an (A) wave. Therefore, it is roughly equally likely at this point that a (C) wave up could make for a higher Primary Ⓑ wave as is shown in the red alternate. It could be that upward price movement will stop in this area with a channel back-test, but there simply is no guarantee.

IF the first scenario is correct, then a lower monthly low on Gold might indicate the Primary Ⓒ wave is underway. If not, then Primary Ⓑ waves of this type can certainly extend higher to 1.382 or 1.618 times their Primary Ⓐ waves. So, the reasonable analyst should not be surprised by movement of this type.

Have an excellent rest of the day.

TraderJoe