Point to note on GOLD and the AUD/USD an elliott wave prespective.

Today was the 8th biggest dollar decline in gold in history, due to the few emails I've gotten about this event, I have decided to write this in depth analytical report. First let us look at the current supercycle in GOLD

It seems evident that the downside risk is huge in terms of this chart alone, let us look at Long term chart of the AUD/USD to make us worry even more ;-)

The high present on the chart above coincided with that high of the primary third wave of cycle wave III of supercycle wave (III), hence it seems logical to speculate, considering the high correlation between this currency pair and the gold market, that the 1974 high on the AUD/USD is the all time high achieved despite the unavailability of data prior to that date. as pointed out on the chart the primary wave 2(circle) rally diverged with the cycle degree peak in gold in 1980, and gold made a higher low in 2001 as this market decline into its final push which signaled a rally to come on the AUD/USD. What we can conclude about these two occurrences is that this currency pair lags the gold market, and significant divergence between both usually indicated a change in trend. Now looking at the current position of the market, Gold broke out above the cycle degree peak of 1980 while the ozzy is still substantially bellow its 1974 peak taking the wave counts into prespective the implications of such a divergence could be fairly catastrophic for both of these markets. Considering the several alternate counts present on the gold market (one which supports the idea that the advance in 2012 was a failure fifth [most likely] or wave 5 still in process), let us take a look at a shorter term ozzy chart to narrow the possibilities.

This happens to be my preferred count supporting the idea of a failure (5)th wave of intermediate degree which terminated the cycle degree correction. On a shorter term basis we either are in the process of an extended 3rd wave of minor degree as visible above or we are forming some sort of expanded flat correction to the upside for our wave 2 of minor degree. Here is my alternate scenerio.

 This picture was taken some time ago proposing this count as an alternate, the proposed wave 4 in this alternate has declined further but this alternate count has not been invalidated yet, However improbable this count may seem, it still remains valid until this pair trades bellow 0.9767 which would make wave 4 larger than wave 2 and would break the rules of a contracting diagonal triangle. Looking at this pairs sister, the kiwi my counts are as follows.

The wave (1) decline from the May 2011 high was a 3-3-3-3-3 expanding diagonal. A point to note however wave 5 of that pattern was shorter than wave 3 which is not typical of expanding diagonals however looking at all the other rules and guidelines it seems like the highest probability count. of course an alternate for the 2011 decline would be wave (a) instead of wave (1) however odds greatly favor the labeling visible on the chart above.

Regards,
Ahmed Farghaly