Gold has been rallying since early June low of 1240 in 5 waves. In Elliott Wave Principle, market does not run in straight line and after 5 waves rally, a pullback in 3 waves is expected.
Current wave structure and count in gold suggest that the yellow metal is close to completing this 5 waves rally in an ending diagonal form. In ending diagonals, each subwave, including wave (i), (iii), and (v) subdivides into three waves, producing a count of 3-3-3-3-3. For clarity, let’s take a look at the basic structure of a 5 waves rally terminated in an ending diagonal below:
Now, let’s compare this with the current wave structure of gold. Below is the latest 1 hour of gold:
Wave 1 is completed at 1284.90 (not shown in the chart)
Wave 2 is completed at 1258.35 (not shown in the chart)
Wave 3 is completed at 1333.12 (denoted by red 3 in the chart)
Wave 4 is completed at 1308.79 (denoted by red 4 in the chart)
Gold is currently thought to be completing wave 5 in an ending diagonal structure. . Let’s take a look at the ending diagonal count below:
wave (i) of diagonal 5 is complete at 1323.19.
Wave (ii) of diagonal 5 is complete at 1313.10.
Wave (iii) of diagonal 5 is complete at 1345.28.
Wave (iv) of diagonal 5 should be complete soon in 1329 – 1333 range before a final thrust in wave (v) of 5.
So what level should we expect for wave 5 to complete? The zones for possible completion of wave 5 can be measured in various ways below:
Wave 5 is equal to wave 1 at 1354
Wave 5 is equal to 1.618 inverse fib extension of wave 4 at 1347
Wave 5 is equal to 0.618 of wave 1-3 projected from wave 4 at 1367
So the target completion zone for wave 5 is 1347 – 1367. Once this area is reached, gold is expected to at least correct the cycle from early June in 3 waves.
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