Yesterday’s analysis expected more downwards movement to complete a correction, and I had expected it to end within 24 hours. This is not what happened. The correction is continuing and is longer in duration than expected.
Yesterday’s Elliott wave analysis expected downwards movement for gold towards a target at 1,268.07. Price has moved lower as expected, but the correction is deeper than anticipated.
Downwards movement for GDX, like Gold, did not reach the minimum requirement for a flat correction. This changes the wave count for the short to mid term for GDX. I expect now that like Gold it is completing a fourth wave triangle.
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The clearest piece of movement is the downwards movement from the high. This looks most like a first, second and third wave. This may be the start of a larger correction.
Intermediate wave (3) is $1.06 longer than 2.618 the length of intermediate wave (1).
Within intermediate wave (3) there are no Fibonacci ratios between minor waves 1, 3 and 5.
Ratios within minor wave 1 of intermediate wave (3) are: minute wave iii has no Fibonacci ratio to minute wave i, and minute wave v is $2.19 longer than 0.618 the length of minute wave i.
Ratios within minor wave 3 of intermediate wave (3) are: minute wave iii has no Fibonacci ratio to minute wave i, and minute wave v is $0.63 longer than 0.382 the length of minute wave iii.
Draw a parallel channel about this downwards movement. Draw the first trend line from the lows of intermediate waves (1) to (3), then place a parallel copy upon the high of intermediate wave (2). I would expect intermediate wave (4) to find resistance at the upper edge of the channel, and it may end there.
Intermediate wave (4) should last one to a few months.
I expect that intermediate wave (4) is completing as a regular contracting triangle. Within the triangle all the subwaves must subdivide as corrective structures, one may be a multiple, and four of the five waves must be zigzags or multiple zigzags.
So far minor wave A is a multiple so this means all the remaining subwaves must be simple A-B-C corrections. Minor wave A is technically a double combination so this means all the remaining waves must be simple zigzags.
Within minor wave C minute wave b may not move beyond the end of minute wave a below 21.93.
Minor wave C may not move beyond the end of minor wave A above 28.03.
Overall this wave count now expects to see very choppy overlapping sideways movement for a few weeks yet before this correction is over.
For the last Elliott wave technical analysis upwards movement for Gold was expected, but fell short of the target at 1,291 by 6.01.
The short term expectation was for a correction to end about 1,263.79 and last about 24 hours. The correction did unfold, but it moved only sideways Continue reading GOLD Elliott Wave Technical Analysis – 13th June, 2014
The target at 1,271 was met and exceeded by 3.97 during the last 24 hours. Upwards movement was expected for the short term.
Slow sideways and upwards movement continued as expected. The main wave count is the same and the triangle wave count is different today.
Movement above 1,257.96 invalidated the main hourly wave count and was allowed for in the alternate wave count, but the structure was incorrect. I still have the same two wave counts for you. The structure at the hourly chart level is exactly the same, the invalidation point is the same, and the channel to provide resistance is the same.
Summary: The correction is incomplete. Price should move higher and sideways for another one or two days before the downwards trend resumes.
This analysis is published about 6:30 p.m. EST. Click on charts to enlarge.
Main Wave Count.
Gold is still within a large fourth wave correction at primary wave degree which is incomplete.
Primary wave 2 was a rare running flat. Primary wave 4 is unlikely to be a flat correction because it is likely to show structural alternation with primary wave 2.
Primary wave 4 is most likely to be completing as a double combination: zigzag – X – second structure. The second structure labeled intermediate wave (Y) is most likely to be a flat correction. Within the flat correction minor wave B must reach a minimum 90% the length of minor wave A at 1,201.98.
If downwards movement does not reach 1,201.98 or below then intermediate wave (Y) may not be a flat correction and may be a contracting triangle. I will keep this alternate possibility in mind as this next wave down unfolds. If it looks like a triangle may be forming I will again chart that possibility for you.
It remains possible that primary wave 4 in its entirety is a huge contracting triangle. This alternate idea is published at the end of this analysis daily.
Overall a double combination for primary wave 4 should take up time and move price sideways, and the second structure should end about the same level as the first at 1,434. Primary wave 4 may not move into primary wave 1 price territory. This wave count is invalidated with movement above 1,532.90.
Within intermediate wave (Y) minor wave B downwards is incomplete. It may be a single zigzag as labeled here. If it is a single zigzag then minute wave c is unfolding as a five wave impulse. Within the impulse minuette wave (ii) may not move beyond the start of minuette wave (i) at 1,293.47. At 1,178 minute wave c would reach equality in length with minute wave a.
This is the main wave count because minute wave a fits perfectly and best as a five wave impulse. The alternate wave count sees this movement as a three wave zigzag.
Within minute wave c downwards when the next wave down is complete then this main wave count will diverge from the alternate. This main wave count would then expect a fourth wave correction and the alternate would then expect downwards movement to be over. The point of differentiation at that stage would be 1,241.12.
I have drawn a channel about minor wave B downwards: draw the first trend line from the start of minute wave a to the end of minute wave b, then place a parallel copy upon the end of minute wave a. I will expect downward movement to find support at the lower end of this channel due to this being the most common place for minute wave c to end. Minuette wave (ii) within minute wave c should find resistance at the upper edge of the channel, if it reached up that high.
Upwards movement can only be a continuation of minuette wave (ii). Yesterday’s hourly chart for this wave count was wrong.
At this stage I would expect minuette wave (ii) to be completing as a double combination: flat – X – zigzag, with subminuette wave x as regular contracting triangle.
Within subminuette wave y micro wave B may not be complete and could move lower. It may not move beyond the start of micro wave A at 1,252.43.
I would expect micro wave C to most likely make at least a slight new high above the end of micro wave A at 1,263.72 to avoid a truncation. But I would not expect it to move much higher than this, because minuette wave (ii) is a combination and their purpose is to move price sideways not to deepen a correction. This one already has a shallow slope. I would not expect the slope of minuette wave (ii) to increase.
I have drawn a best fit channel about this correction. Once micro wave C may be complete (as soon as a new high above 1,263.72 is seen) then the invalidation point at 1,252.43 no longer applies. At that stage I would use the channel as first indication of a trend change; when this channel is clearly breached by downwards movement then a third wave may be underway. At that stage price movement below 1,241.16 would provide full and final confidence that a third wave is underway.
When minuette wave (ii) is complete then I can calculate a target for you for minuette wave (iii). I cannot do that today.
Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,293.47.
Alternate Wave Count.
If within minor wave B downwards the first wave is a three wave zigzag and not a five wave impulse then minor wave B may be completing as a double zigzag, with minute wave x a nine wave triangle. This means that the current downwards movement may be completing as a zigzag and not an impulse. This may explain the sideways movement of the last few days quite nicely. The overall direction is the same as I still expect more downwards movement.
This alternate has a lower probability than the main wave count because when the downwards wave for minute wave w is seen as a three it does not fit as neatly with momentum and the Fibonacci ratios are not as startlingly good as the main wave count.
Within minute wave y once minuette wave (b) is complete then minuette wave (c) downwards would be the final movement to complete minor wave B. At that stage subsequent movement above 1,241.12 would confirm this alternate wave count and invalidate the main wave count. But that is still weeks away at this stage.
Within minute wave y minuette wave (b) would be incomplete on the hourly chart. It may not move beyond the start of minuette wave (a) above 1,293.47.
If the next piece of downwards movement does not show a strong increase in downwards momentum then this alternate would be an excellent explanation.
At this stage there is absolutely no difference in the short term expectation, invalidation points, short term structure or trend channels between the main and alternate wave counts.
I have provided some more detail on this chart for you for subminuette wave w, which was the source of my mistake on yesterday’s analysis.
Daily – Triangle.
It remains possible that primary wave 4 in its entirety is a huge regular contracting triangle.
So far one of the five subwaves of the triangle subdivides into a double zigzag. All the other four subwaves must then be simple corrections, and three of them must be single zigzags. The fourth may be another type of simple A-B-C correction, and most commonly it would also be a zigzag.
Intermediate wave (D) would most likely be incomplete for the triangle to have a typical look. Intermediate wave (D) may end between 1,233 and 1,213, 75% to 85% the length of intermediate wave (C), which in my experience is a typical wave length for a triangle subwave.
Intermediate wave (D) may not move beyond the end of intermediate wave (B) for a contracting triangle. For a barrier triangle intermediate wave (D) may end about the same level as intermediate wave (B) as long as the B-D trend line remains essentially flat. In practice this means that intermediate wave (D) may end very slightly below the end of intermediate wave (B). This lower invalidation point is not black and white. This is the only Elliott wave rule which is not black and white.
Intermediate wave (E) may not move beyond the end of intermediate wave (C) for either a contracting or barrier triangle.
Last analysis expected downwards movement with an increase in momentum. This is not what happened. Upwards movement above 104.49 invalidated the daily wave count.
I have a new wave count. A variation of prior analysis is an alternate wave count.
Summary: Price should move lower to a target at 97.04. The invalidation point is at 105.21.
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Main Wave Count.
The one thing which looks most certain in this wave count is cycle wave a downwards is a five wave impulse. This means cycle wave b may not move beyond the start of cycle wave a above 146.73. Cycle wave b should subdivide as a three wave structure. It looks like a double zigzag which would be incomplete.
Within the double zigzag this wave count sees primary wave X as a regular contracting triangle, ending at 85.64 where intermediate wave (E) typically undershot the B-D trend line. The alternate analysis sees primary wave X triangle ending earlier at 84.07, and this is the key difference between the two wave counts.
Within primary wave Y intermediate wave (C) is incomplete. It would most likely move at least a little above the end of intermediate wave (A) at 112.24 to avoid a truncation.
The daily chart shows the structures of intermediate waves (B) and (C) within the second zigzag of primary wave Y.
Intermediate wave (C) may subdivide as either an impulse or ending diagonal. It looks so far more like an impulse.
Within the impulse minor wave 2 is an incomplete zigzag. This part of the wave count sees minute wave a downwards within minor wave 2 as a five wave impulse. If this is correct then minute wave b may not move beyond the start of minute wave a at 105.21.
At 97.04 minute wave c would reach equality with minute wave a.
Minor wave 2 may not move beyond the start of minor wave 1 below 91.24.
Thereafter, this wave count would expect a third wave upwards.
At 118.36 intermediate wave (C) would reach equality in length with intermediate wave (A).
Movement above 112.24 (after minor wave 2 is complete) would provide confirmation of this wave count. At that stage the alternate below would be invalidated.
Movement above 105.21 would invalidate both wave counts at this stage. If this happens then my analysis of minute wave a downwards as a five wave structure is wrong. This would indicate minor wave 2 would be over and a strong third wave upwards would be underway. I would expect any invalidation above 105.21 to be followed by significant further strong upwards movement.
Alternate Wave Count.
This wave count follows on directly from last analysis.
Cycle wave b is here seen as complete. Within it primary wave X is a regular contracting triangle ending a bit earlier. This does not have as clean a fit as the main wave count.
Cycle wave c downwards would have begun.
Within cycle wave c minor waves 1 and 2 would be complete. A base channel drawn about them is breached by upwards movement and this reduces the probability of this wave count.
At 84.00 minute wave iii would reach 2.618 the length of minute wave i.
At 72.53 minor wave 3 would reach 1.618 the length of minor wave 1.
This wave count requires an imminent strong increase in downwards momentum as the middle of a third wave begins. This now looks unlikely.
Minute wave ii (if it were to continue higher) may not move beyond the start of minute wave i above 105.21.
Another sideways session and another small red doji candlestick still fits the wave count. However, with sideways movement lasting over two days now I am again considering an alternate idea published previously. It makes no difference to overall direction at the daily chart level, but it makes a difference to target calculation and short term expectations.
This wave count expects Gold is within a grand super cycle correction.
Sideways movement completed a red doji candlestick for Friday’s session. The prior day’s high at 1,258.38 remains intact for now and the wave count remains the same.
Last analysis expected that upwards movement was over and price should move lower. Price moved higher first, but remains below the invalidation point. Since reaching a high at 104.49 price has turned downwards.
Summary: I expect to see an increase in downwards momentum from Oil. The short term target at 88.17 may be met in about three or four weeks.
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The daily chart shows all of the start of cycle wave c downwards.
Minor wave 1 subdivides perfectly as an impulse and minor wave 2 as an expanded flat correction, which is a 66% correction of minor wave 1.
At 72.53 minor wave 3 would reach 1.618 the length of minor wave 1. Minor wave 1 lasted 65 days, and I would expect minor wave 3 to be extended so longer in duration. It may last a total Fibonacci 89 days, but at this stage that expectation looks like it may be too soon.
At 84.00 minute wave iii would reach 2.618 the length of minute wave i. Minute wave iii so far looks like it will be extended both in time and price. Minute wave i lasted 10 days and minute wave iii may last a Fibonacci 55 days in total.
At 88.17 minuette wave (iii) would reach 2.618 the length of minuette wave (i). Minuette wave (i) lasted 11 days and minuette wave (ii) lasted 18 days. If minuette wave (iii) is extended in both time and price it may end in another three to four weeks.
I have redrawn the base channel about minor waves 1 and 2. The third wave down should have enough momentum to break through support at the lower edge of the channel.
Within minuette wave (iii) no second wave correction may move beyond the start of its first wave above 104.49.