XAO Update

As discussed yesterday, breaking below the recent low would invalidate the short term count for an ending triangle - this has now happened. The larger move downwards is still corrective and the expectation is for further corrective action to the downside - perhaps bouncing on 4500 first. More charts later.

XAO Short term update

It looks as though the end of wave C has still been unfolding as a larger triangle - from this post: "however there tends to always be a challenge with triangles and how they play out" - hence the formation over the last few weeks indicates a larger triangle has played out as the end of wave C down.

This larger triangle should have now ended and must not fall below 4508 for the short term count to be valid - a corrective push up to the 5000 levels should soon commence. The count from the previous post could still play out - but either way, a push higher is now the required short term view.

GOLD - Holding the Fort at the 1600s

Gold's rapid completion of the final D and E waves within the larger wave (iv) triangle and breaking the 1600 levels as described back in May now has the bulls paused at just under 1600 - so what's next?

A 4th wave triangle always indicates an impending change in trend - this could be in the form of a minor correction, or as in this case a much larger corrective move.

Perhaps Gold news could kick off a decline although events rarely influence market moves since it is the social mood from the herd that drives markets.  Bad news in bull markets is usually shrugged off, but as the mood turns, and the market falls - bad news isn't shrugged off so easily. Perhaps Ron Paul knows something we don't? Ron Paul worries Fort Knox gold is gone


The short term chart has a couple of interpretations. The first is the ending of wave E within the Triangle. If it's the Green E, then it appears an ending diagonal is forming and the ending of the Gold bull market may not be far away - this is a loose statement at the moment as channel lines, estimated targets need to be taken into consideration.


The Second, if the wave (iv) Triangle finished at the Black wave E, then it appears a 5 wave move upwards has completed and a small wave 'ii' down is underway - this is the pullback one expects when hitting/breaking psychological levels. The preference is for the black count to be the primary view at this stage with a view to heading up to the 1640-1650 levels.


Once wave 'ii' down gains some footing, we can establish some channel lines and bullish targets. A break below the black wave 'E' at 1520 would certainly be a bearish signal.

GOLD update

As covered in previous gold posts, gold has headed higher to the 1600 level since a 4th wave triangle completed and sees Gold at a new high. A small pullback may be needed at this psychological level, but it must not drop below 1540 which could indicate a significant top is in.

Gold is anticipated to break thru the 1600 levels and head higher over the coming weeks. Charts later....

Short Term XAO update

Wave D up should be on the verge of heading northwards with MACD divergence on the 30min chart indicating a change (of some form) is pending. Discussed in the last post was the likelihood that this small down leg may in fact use the previous upper channel line as support – which seems to be occurring

However, a push higher should occur very shortly. Dropping under the channel line with momentum would be a cause for concern on the short term count.

XAO Short Term Update

The XAO is expected to bounce soon and head higher as described in the chart below. The previous wave's upper channel line may be a place for the XAO to find footing.

Dropping below the previous recent low would require re-examination of the short term wave count, although would still be legal for a flat within a triangle leg.

Gold - Short term update

*** 13th July UPDATE: It now appears the triangle has completed with a very small wave 'E' and the expectation is for Gold to head higher (with the obvious pull backs along the way) to 1600+. In the short term, Gold should not drop below 1540 (the ending of wave 'E'). ***


Gold's 4th Wave triangle is nearing close to completion with waves 'D' and 'E' to complete. Once finalized Gold should head upwards either in a 5 wave impulse or perhaps an ending diagonal pattern finishing above the 1600 levels.

Once a breakout of the triangle has occurred, the first pullback should provide some clues as to the future action and where Gold may end up. The final longer term action of  Gold can be seen here.

Should Gold drop below the start of wave 'C' at 1480 would cast doubt on at least the short term outlook.

Australian Interest Rates - July

The last RBA board decision left interest rates on hold (surprise surprise) and going by the text of the meeting minutes I can't understand how anyone could make a decision one way or the other based on the adjectives and nouns provided. If I were to jumble up the meeting minutes from the last several months and ask you to select the appropriate meeting minutes for the correct month - you'd have no hope.

Alternatively anyone could spend 5 mins reviewing the 90 day bill rate and making a well educated decision as to the RBAs cash rate target - as the cash rate target simply lags the 90 day bill rate. The 90 bill rate is still around 5% (4.98 as of June 30th) and is little changed since beginning of June shown here. For the upcoming July decision, there is no logic for the RBA to change the cash rate target currently at 4.75%.

XAO Short Term Update

The XAO has broken above the upper channel line after finishing a small triangle for a triple combination correction.

The overall assumption is a larger triangle is developing as described in this medium term update, this is based on the fact the last several up/down legs in the longer term sideways structure are corrective - and a triangle does make sense at this point.

A small pullback may be needed in the coming days (shown) to provide some definition to this wave 'D' upwards leg. On the downside, breaking below the down sloping support line would raise some serious questions on the validity of the count.

Short term XAO update

THURS UPDATE: It appears a very small triangle wave 'e' has completed after all, and the XAO has broken above the channel line. Next leg up now appears underway.

The last several trading days have not provided clear impulsive patterns higher, suggesting corrective action is ongoing and thus brings a clue - raising a strong possibility an Elliott wave triple combination corrective pattern is unfolding for this entire leg down. An ending triangle will appear at the end of triple combinations, however there tends to always be a challenge with triangles and how they play out - sometimes triangles can form one of the waves within a triangle itself. Hence, the chart below provides a rough idea how the triangle is unfolding

The down sloping channel lines now have a role to play - a solid break out and higher after the triangle completes will be a strong signal. However, there will possibly be a false break that can sometimes occur with triple combination. Supporting an end to this correction is the MACD price oscillator as it is clearly divergent on the 60min chart (not shown) since the second week of June.

The bottom line: A change in trend appears to be close at hand

XAO Update

It appears the downwards corrective action on the XAO may still not be complete with a distinct lack of a 5 wave impulse from the lows discussed in the second part of the last XAO post.

This may mean a triple flat or a triple combination correction is unfolding.

Short Term Gold Update

Gold has seen some decent moves both up and down over the last 3 weeks. This structure labeled as triangle  wave 'C' appears to be a near completed expanding flat (3-3-5) - a corrective structure and valid within triangles and wave 2's.

Both the triangle and the green wave count (that sees a shorter term triangle completed) anticipate a push higher in the coming days. Again, the preferred count is in black with triangle waves 'D' and 'E' yet to complete.

The longer term wave structure that sees a higher Gold prices is here and anticipates levels in the 1600+ range before a significant top is in place.

Medium Term XAO update

The recent declines on the XAO have resulted in questioning of the wave count since the low of 4560 in March was broken. In addition, the down leg that started in April still looks very corrective, hence the evidence at hand implies a larger correction is most likely still unfolding. This corrective wave may in fact be a large sideways triangle.

The alternative bearish count still has validity until proven incorrect.

On the short term, Triangle Wave 'C' is below as a double flat correction. This leg should be complete or very near complete, wave 'D' should soon be underway.

Short Term Gold Update

Gold is still moving as described in previous posts - a triangle is most likely unfolding that will continue to see further sideways moves.