All four Elliott wave counts remain valid. The most recent movement has a better fit in terms of structure for Elliott wave count 4.
In line with Gold analysis, I have a bull and a bear wave count for Silver. Price will tell us which one is correct, but before that happens structure and volume will indicate which is more likely.
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Bull Wave Count
If cycle wave a is over and Silver, Gold and GDX have all recently seen cycle degree trend changes, then importantly for Silver cycle wave a subdivides as a double zigzag.
A double zigzag is a multiple, and the maximum number of corrective structures in a multiple is three. Any wave count which labels W, Y or Z as W-X-Y within them is invalid. W, Y and Z waves may only be simple corrective structures labelled A-B-C (or A-B-C-D-E in the case of a triangle).
Super Cycle II may not be a multiple and must be a flat correction. Within a flat correction the A wave must be a three, and a double zigzag is classified as a three.
Within a flat correction cycle wave b must retrace a minimum 90% the length of cycle wave a at 46.279.
Within a flat correction cycle wave b may make a new all time high above the start of cycle wave a, as in an expanded flat.
The most likely structure for cycle wave b to take price that high is a zigzag.
If cycle wave b is unfolding as a zigzag then within it primary wave A should be a five wave structure, either an impulse or a leading diagonal.
I have adjusted the wave count of intermediate waves (1) and (2) to see intermediate wave (1) as a five and intermediate wave (2) as a double combination.
If intermediate wave (1) is a five then primary wave A may be an impulse. This fits better if cycle wave b is to be a zigzag.
At 22.485 intermediate wave (3) would reach 2.618 the length of intermediate wave (1). Intermediate wave (3) may only subdivide as an impulse. Within it minor wave 1 looks like a five on the daily chart. Minor wave 2 may or may not be over. If it continues lower it may not move below the start of minor wave 1 below 15.296.
A new high above 18.486 would invalidate the bear wave count and provide confidence in this bull wave count.
Bear Wave Count
This bear wave count is identical to the bull wave count up to the end of the triangle for intermediate wave (B) within the second zigzag of primary wave Y.
Thereafter, it looks at the possibility that intermediate wave (C) within the zigzag is not over.
Within intermediate wave (C) minor wave 1 fits as a five better than the bull wave count. Minor wave 2 now though looks to be too large on the weekly and daily chart.
Within minor wave 3 no second wave correction may move beyond the start of its first wave above 18.486.
At 11.52 intermediate wave (C) would reach 0.618 the length of intermediate wave (A). At 5.309 intermediate wave (C) would reach equality in length with intermediate wave (A).
I have drawn a base channel about minor waves 1 and 2. Price continues to find resistance at the upper edge of the base channel.
The biggest problem with this bear wave count today is the base channel. It is difficult to see minute wave ii over at the high labelled minuette wave (a) because this upwards wave looks so much like a five wave impulse on the daily chart. For this wave count minute wave ii should continue, but that means it will breach the base channel drawn about minor waves 1 and 2, one degree higher.
It is also possible that my conclusion that minuette wave (a) is a five wave structure is wrong because this upwards movement may have been a zigzag multiple. A new low below 15.296 would indicate that this is so, and at that stage I would expect minute wave ii was over and minute wave iii within minor wave 3 down may be underway.
Minute wave ii may not move beyond the start of minute wave i above 18.486.
Since the end of minor wave 2 at 18.486 it is down days which have the highest volume. This may indicate that the trend remains down. This slightly favours the bear wave count.
The ADX level is low (below 20) and declining, indicating the market is in a consolidation phase, not trending. This indicates that although price is below the 20 day EMA the trend is not necessarily clearly down, the signal may be false. MACD is close to zero indicating a lack of momentum. This fits a wave count which sees Silver as within a second wave correction at this time.
Downwards movement for Wednesday was expected, but this is not what happened. While upwards movement remains below the invalidation point it makes the situation unclear. I will present four Elliott wave counts, 2 bull and 2 bear.
Downwards movement invalidated the hourly Elliott wave count and was unexpected.
The short term target at 1,215 was not met. Price has moved lower, and a second wave correction was expected to find support at the lower edge of the blue channel.
The main Elliott wave count expected downwards movement. This is not what happened. The small channel was breached on the alternate hourly Elliott wave count, which was the first indicator it was more likely.
Yesterday’s Elliott wave analysis expected it was extremely likely price would move higher, although confirmation was required by a channel breach on the hourly chart and a new high above 1,206.49. We did not get confirmation of a trend change and price moved lower.
Downwards movement was expected as 60% likely, which is what happened.
Downwards movement was confirmed quickly with a channel breach of the hourly chart. Thereafter, a red candlestick was expected for Tuesday’s session.
The main hourly Elliott wave count expected upwards movement. It had two targets, 1,212 and 1,223, for a possible extended fifth wave. The second target was met and exceeded slightly when price reached 1,224.35.
Summary: It looks like minute wave i is now over, but this is unconfirmed. A clear breach of the channel on the hourly chart is required for confidence that minute wave ii has begun. Minute wave ii is likely to show on the daily chart as one to three red candlesticks, and is most likely to end about the 0.382 Fibonacci ratio of minute wave i at 1,207, or a little less likely at the 0.618 Fibonacci ratio at 1,196. The trend at minor, intermediate, and cycle degrees remains up, but the short term trend sees Gold in a small correction at minute degree.
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Main Daily Wave Count
There are more than thirteen possible corrective structures that cycle wave b may take. At this stage it is unclear what degree to label this big movement. Primary wave A (or W) is an incomplete zigzag.
Cycle wave b may be a flat correction where primary wave A is a zigzag. Cycle wave b may be a triangle where primary wave A is a zigzag. Cycle wave b may be a combination where primary wave W is a zigzag. Cycle wave b may be a double zigzag with the first in the double, primary wave W, incomplete.
When the big zigzag now labelled primary wave A is complete, it is also possible that cycle wave b could be over there with the degree of labelling within it moved up one degree.
When intermediate wave (C) is a complete five wave structure alternate wave counts will be required to manage the various possibilities of cycle wave b continuing.
A new high above 1,308.10 would invalidate the alternate and confirm this main wave count at primary and cycle degree.
The upwards wave labelled intermediate wave (A) fits only as a five wave structure, a leading expanding diagonal. Within a leading diagonal the first, third and fifth waves are most commonly zigzags, and the fourth wave should overlap first wave price territory.
Because intermediate wave (A) subdivides as a five, intermediate wave (B) may not move beyond its start below 1,131.09.
At 1,320 intermediate wave (C) would reach equality in length with intermediate wave (A). If price keeps rising through this first target, or if when it gets there the structure is incomplete, then I would use the second target. At 1,429 intermediate wave (C) would reach 1.618 the length of intermediate wave (A).
Because intermediate wave (A) is a diagonal then it is highly likely intermediate wave (C) will be an impulse in order to exhibit alternation. Intermediate wave (C) may end about the upper edge of the channel drawn about primary wave A.
This wave count sill has problems of structure within primary wave 5 of cycle wave a:
– within primary wave 5 intermediate wave (2) is a running flat with its C wave looking like a three and not a five.
– within intermediate wave (5) the count is seven which is corrective; either minor wave 3 or 5 will look like a three wave structure on the daily chart where they should be fives.
It is for these reasons that I will retain the alternate until price confirms finally which wave count is correct and which is invalidated.
Volume for downwards movement of minor wave 2 is lower than the prior upwards movement of minor wave 1. Importantly, Wednesday’s session sees volume increase beyond that seen for the prior three downwards days, which supports the main hourly wave count.
Minor wave 1 lasted seven days (no Fibonacci number) and minor wave 2 lasted a Fibonacci three days. If minor wave 3 exhibits a Fibonacci duration it may last thirteen days, which would see it end in nine more sessions (depends on how long the corrections within it last).
At 1,303 minor wave 3 would reach 1.618 the length of minor wave 1.
Minute wave i is now a complete five wave impulse. Ratios within minute wave i are: there is no Fibonacci ratio between minuette waves (i) and (iii), and minuette wave (v) is just 1.55 longer than equality with minuette wave (iii). Minuette wave (v) shows slightly stronger upwards momentum than minuette wave (iii). This is a reasonably strong long fifth wave which is typical of Gold.
So far price remains within the channel drawn using Elliott’s second technique about minute wave i. When this channel is breached by at least one full hourly candlestick below the lower trend line and not touching it that shall provide trend channel confirmation that minute wave i is over and minute wave ii has begun.
Minute wave ii is a second wave correction within a third wave one degree higher. It may be more brief and shallow than second waves often are. In the first instance it is more likely to correct to about the 0.382 Fibonacci ratio of minute wave i at 1,207. If price keeps falling through this first target the next expectation would be at the 0.618 Fibonacci ratio at 1,196.
Minute wave ii is likely to show up on the daily chart as one to three red candlesticks or doji so that minor wave 3 has the right look at the daily chart level.
There are several structural possibilities for minute wave ii. It should be choppy and overlapping. If it unfolds as an expanded flat or combination it may include a new high above its start at 1,224.35. There is no upper invalidation point for this reason.
Minute wave ii may not move beyond the start of minute wave i below 1,178.59.
Alternate Daily Wave Count
This alternate wave count sees Gold as still within a primary degree downwards trend, and within primary wave 5 intermediate wave (3) has begun.
At 957 primary wave 5 would reach equality in length with primary wave 1. Primary wave 5 may last a total Fibonacci 55 weeks. It is now beginning its 39th week.
The maroon channel about cycle wave a from the weekly chart is now breached by a few daily candlesticks and one weekly candlestick. If cycle wave a is incomplete this channel should not be breached. The breach of this channel was the first warning this wave count may be wrong.
This wave count still has a better fit in terms of better Fibonacci ratios, better subdivisions and more common structures within primary wave 5, in comparison to the main wave count above.
Within intermediate wave (3) minor wave 1 is a long extension. Within minor wave 1 minute waves iv and ii are grossly disproportionate, with minute wave iv more than 13 times the duration of minute wave i. This also reduces the probability of this wave count.
Although the invalidation point is at 1,308.10, this alternate wave count should be discarded long before that price point is reached. If the maroon channel is breached again by one full daily candlestick above it and not touching it then I would discard this alternate wave count.
A new low below 1,131.09 would confirm that intermediate wave (3) down is underway.
Minor wave 2 would now be a completed zigzag. If this alternate is correct it should show itself this week. It now expects a big increase in downwards momentum as a third wave at two degrees begins to gather momentum. An increase in volume as price moves lower would support this wave count. A new low below 1,178.59 would be a strong indication this wave count may be correct.
This alternate wave count remains technically possible. Because the implications are important I will continue to publish it at this stage.
This analysis is published about 05:16 p.m. EST.
The main Elliott wave count expected a fourth wave correction to unfold downwards / sideways. This is what happened, although it is more time consuming than expected.
A strong upwards movement fits one of the three hourly Elliott wave counts from yesterday. The next 24 hours should tell us which Elliott wave count is correct.