GOLD - The Next Parallel

It has been stated several times in this blog that I am counting GOLD in parallels until that is no longer possible. This brings up two views on the question of the count. The first view is that price movement since the 2011 Cycle Wave III top is a very compressed triangle as Cycle Wave IV. That view is shown below on the log scale 3-monthly chart, below. It has been presented before. The measuring objective for this triangle "the widest width of the triangle added to the breakout point" has been met and exceeded, as shown. It is astonishing that GOLD has been up in nearly every quarter since October 2023 (still recognizing this quarter is only just started).

GOLD (GC Futures) - 3 Month - Log Scale Triangle Target

So, it is entirely plausible we had a top in the vicinity of the target. But is it the top? Well, two nagging problems abound. The first is that the internal ratios of this barrier triangle just seem "too compressed". While it is a 'legal' triangle under the rules, usually, not always, triangles have 62 - 78% legs. This triangle does not. One is free to ask, "why not?". The next problem is the "indicator problem". Most of the indicators - whether Elliott Wave Oscillator, MACD, or RSI, etc. - are still screaming "third wave!" if we can believe them. So, what then?

If we look at a slightly shorter-term chart, the one-monthly view, we can see a possible answer to this conundrum. 

GOLD (GC Futures) - Monthly Log Scale - Running Cycle IV

In order to find that next parallel, what IF Cycle Wave IV actually ended back in Jul-Aug 2018 as a "running fourth wave", instead of as a triangle? On a log chart that produces the potentially acceptable channel shown above and provides for reasonably sized Primary waves. Notice, the indicator problem in this chart: both indicators are at highs in 89 candles. Bear in mind Mr. Elliott would applaud you for using a parallel on a long-term log chart.

So, what does this mean? Given such a stellar advance, what if GOLD largely traded sideways or made a large properly shaped triangle for its Primary ④th wave? Notice the lower rising parallel trend line and EMA-34 are both now high enough to prevent overlap - especially if there is more sideways wave travel. If this count is not adopted, notice the otherwise difficult problem of trying to find the Primary waves within Cycle Wave V.

Could GOLD go over the high again in this scenario? It certainly could: the Intermediate (B) wave of a Flat, an expanded flat, or a "running triangle" for Primary ④ could certainly go over the high. From a trading perspective, "range traders" might find it ideal (not trading or investment advice), but so might the algos that revel in creating havoc in the volatility. So, the utmost caution and low position sizing would seem prudent for retail traders. And, lastly, the Weekly Chart below helps provide more information.

GOLD (GC Futures) - Weekly - Spinning Top Candle

Note that price is still over the 18-week SMA, so the bias is up, and the weekly slow stochastic is still embedded. Yes, there is a red "spinning top" candle here which is not confirmed on a weekly basis, and confirmation is always needed of a single candle pattern. But note also, price has not been back to the 18-week SMA since the beginning of 2025. And price has not been back to the lower weekly Bollinger Band since October 2023 (not shown but interested readers should look it up).

Further, notice how broker Ira Epstein's advice of "not buying new" over an upper Bollinger Band was quite savvy in this instance. Now he is largely talking about trend trading, but if one bought new positions at the high outside the Bollinger Band two weeks ago, then the close this week is lower. Yes, he might say (imitatingly), "sure you would have ridden the rocket perfectly, and gotten out at the top... um, not likely. I wouldn't have, only you would have." This is distinctly different advice than I heard Peter Schiff (Gold Dealer) give hours before the high on YouTube (paraphrase). "Buyers must buy the all-time-high. Because if they don't, then the all-time-high is only going to get higher." And that was right before the $926 excursion from high-to-low in the last two days of this week. Let's hear it for sentiment.

Please be careful out there. Be patient & flexible. If you don't know what a wave count is at the moment, that is a good time to 1) stop, 2) take measurements, and 3) use the Principle of Equivalence to determine what wave patterns best fit those measurements. I've done what I can do. Now, it's up to you.

Have an excellent rest of the weekend.

TraderJoe