All three hourly Elliott wave counts expected upwards movement, which is what happened on Friday.
Last analysis warned Elliott Wave Gold members that gold may continue sideways in the current consolidation for a while yet. Another very small range day moves price essentially sideways on very light volume.
This market is consolidating. Volume will be used to guide as to which direction the breakout is most likely. Stochastics along with support and resistance will be used to indicate when one swing with the consolation ends and the next begins.
Price was expected to move higher, but sideways movement suggests a triangle is forming for the short term.
Two Elliott wave triangle counts are considered, and the classic symmetrical triangle is examined in this analysis.
Summary: A triangle may be either complete or complete very soon. Watch for the breakout; it may come within a few days. Some trading guidance for triangles is given from Dhalquist and Kirkpatrick in the classic technical analysis section.
New updates to this analysis are in bold.
Last monthly chart is here.
ELLIOTT WAVE COUNTS
FIRST WAVE COUNT
Cycle wave b may be completing as a double combination: zigzag – X – flat. The second structure, a flat correction for primary wave Y, may be underway.
Within a flat correction, intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 15.938. Intermediate wave (B) has met this minimum requirement; the rule for a flat correction is met. Intermediate wave (B) is longer than 1.05 times the length of intermediate wave (A) indicating this may be an expanded flat. Expanded flat corrections are the most common type. Normally their C waves are 1.618 or 2.618 the length of their A waves.
The target calculated would see primary wave Y to end close to same level as primary wave W about 21.062. The purpose of combinations is to take up time and move price sideways. To achieve this purpose the second structure in the double normally ends about the same level as the first.
While the combination wave count at the weekly chart level does not currently work for Gold, it does still work for Silver. They do not have to complete the same structures for cycle wave b, and fairly often their structures are different.
For this first wave count, upwards movement for intermediate wave (C) must subdivide as a five wave structure. It may be unfolding as an impulse.
Within the impulse of intermediate wave (C), only minor wave 1 was over at the last high and now minor wave 2 may now be complete.
Minor wave 2 may have ended very close to the most likely point of the 0.618 Fibonacci ratio of minor wave 1 at 16.347.
Minor wave 1 lasted 44 days. Minor wave 2 may have completed in 20 days, just one short of a Fibonacci 21.
Minor wave 3 may only subdivide as an impulse. It would be very likely to show its subdivisions clearly at the daily chart level. Minute waves ii and iv within it should show up as multi day pullbacks or sideways consolidations. Minute wave ii now shows up at the weekly and daily chart levels.
Within minute wave iii, no second wave correction may move beyond its start below 16.602.
A base channel is added to minor waves 1 and 2. Downwards movement is finding very strong support at the lower edge of this base channel. If price breaks below the base channel, then the probability of this wave count would substantially reduce prior to invalidation.
This wave count now expects to see a strong increase in upwards momentum as a third wave up at three degrees unfolds. The fact that strong upwards movement has failed so far to materialise must reduce the probability now of this wave count.
SECOND WAVE COUNT
It remains possible for Silver that a large regular contracting or regular barrier triangle may be completing.
Within a triangle, one of the sub-waves must be a more complicated multiple, usually a multiple zigzag. This may be complete for primary wave B.
Primary wave C upwards may now be complete. The upper A-C trend line does have a fairly steep slope though, so it must be accepted that primary wave C may not be over and may continue higher. If it does, it may not move beyond the end of primary wave A above 21.062.
Primary wave C must subdivide as a three wave zigzag.
This triangle wave count now expects that primary wave D downwards may now be underway. Two scenarios for how it subdivides are presented below at the daily chart level.
Primary wave D of a contracting triangle may not move beyond the end of primary wave B below 15.197.
Primary wave D of a barrier triangle may end about the same level as primary wave B at 15.197; as long as the B-D trend line is essentially flat, the triangle will remain valid. Unfortunately, there is some subjectivity in this rule; it is not black and white.
Primary wave D must subdivide as a zigzag. Within the zigzag, intermediate wave (B) may be any corrective structure. At this stage, it may be a complete regular contracting triangle.
Minor wave E slightly overshoots the A-C trend line. Sometimes triangles end with a small overshoot.
If price begins to move strongly lower and makes a new low below 16.602, then confidence may be had in this wave count.
The target for primary wave D expects to see the most common Fibonacci ratio between intermediate waves (A) and (C).
ALTERNATE DAILY CHART
When an Elliott wave triangle is considered, it is vital to always consider alternate ways to label the triangle.
The triangle may be minor wave B within intermediate wave (B). The breakout may be upwards.
Within the triangle, minute wave e may not move beyond the end of minute wave c. A new low below 16.814 would invalidate this triangle idea and add some confidence to the main wave count above.
Within the zigzag of intermediate wave (B), minor wave C would be very likely to make at least a slight new high above the end of minor wave A at 17.094 to avoid a truncation.
Click chart to enlarge. Chart courtesy of StockCharts.com.
The strongest week during this large consolidation is a downwards week ending 12th of June. However, this is stronger by only a small margin. The next strongest week is an upwards week. It may be better to look at daily volume bars to determine the most likely direction of a breakout from this consolidation.
The last two completed weeks moved price higher with an increase in volume. This is bullish.
Another weak bullish signal comes this week from On Balance Volume.
This chart supports the first and second alternate Elliott wave counts.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Volume suggests an upwards breakout from the symmetrical triangle.
The last day though is very bearish. The long upper wick is bearish as is volume.
From Dhalquist and Kirkpatrick regarding symmetrical triangles:
“The breakout is usually upwards (54% of the time). Symmetrical triangles have many false breakouts and must be watched carefully. The breakout commonly occurs between 73% and 75% of the length of the triangle from base to cradle. Throwbacks and pullbacks occur 37% and 59% of the time respectively, and, as in most patterns, when they occur, they detract from eventual performance. This implies that for actual investment or trading, the initial breakout should be acted upon, and if a pullback or throwback occurs, the protective stop should the tightened.”
And regarding trading triangles:
“The ideal situation for trading triangles is a definite breakout, a high trading range within the triangle, an upward-sloping volume trend during the formation of the triangle, and especially a gap on the breakout.
Although triangles are plentiful, their patterns suffer from many false and premature breakouts. This requires that a very strict breakout rule be used, either a wide filter or a number of closes outside the breakout zone. It also requires a close protective stop at the breakout level in case the breakout is false. Once these defensive levels have been exceeded, and price is on its way, the trader can relax for a little while because the failure rate after a legitimate breakout is relatively low Trailing stops should then be placed at each preceding minor reversal.”
For the example in the chart above, a breakout is required either above (54% likely) or below the trend lines. It should come soon now as price is close to about 75% the length of the triangle. It will be there in about two more days.
A gap on the breakout would increase performance. Volume supporting movement would also provide confidence. Stops may be set just above or below the triangle trend lines; below if an upwards breakout or above if a downwards breakout occurs. A position should be entered on the breakout, but do not wait for a throwback or pullback as it may not come.
Published @ 01:11 a.m. EST.
[Note: Analysis is public today for promotional purposes. Specific trading advice and comments will remain private for members only.]
Another slightly higher high and higher low sees price move upwards in slow, choppy overlapping movement.
Although price is overall moving higher as has been expected, the choppy overlapping movement is now indicating that this B wave may be a triangle. That possibility is charted and published today for Elliott Wave Gold members.
Last analysis expected a sideways consolidation to last about eight sessions. Price has moved sideways and lower for the last four sessions.
Members were advised in last Elliott wave analysis that price may move lower in the very short term to test support at a trend line, which was given on hourly charts. Thereafter, price was expected to turn upwards. This is what has happened. Price moved strongly lower, coming very close to the trend line, before turning upwards.
Members were advised that this should be used as an entry opportunity for long positions. These positions should now be profitable.
Volume will be relied upon strongly today to judge the next most likely direction for Gold.
Last analysis of Bitcoin expected more upwards movement, which is what has happened. Last published Bitcoin analysis is here.
All charts are on a semi-log scale.
The data for this wave count begins from June 2010.
What looks like a five wave impulse may be completing. With no Fibonacci ratio between cycle waves III and I, it may be more likely that cycle wave V will exhibit a Fibonacci ratio to either of III or I.
This movement does not fit well at all into a channel.
I have taken some time to look at the waves which now in hindsight are obviously complete, particularly the waves within cycle wave III. I have noticed some tendencies of this market:
– Bitcoin behaves like an extreme commodity. Its impulses have a curved look with slower second waves, quick fourth waves, and strong sharp fifth wave extensions. This tendency shows up in bullish and bearish waves.
– Third waves are much longer than first waves, and fifth waves are longer still. Again, this is an extreme version of typical commodity behaviour.
– The middle of its third waves may exhibit Fibonacci ratios within them, but overall it does not regularly exhibit good Fibonacci ratios. This would make target calculation particularly difficult.
– Candlestick reversal patterns are common at the end of Bitcoin’s strong fifth waves. These are engulfing patterns or star patterns with very long wicks on the final candlestick.
– Early second wave corrections are extremely deep, close to 0.8 and often deeper than 0.9 the depth of the prior first wave.
The “forever” trend line should be used to indicate when the top may be in for BitCoin. If this line is breached, the probability of a crash will increase (it will not be certain, only highly likely).
Notice that Bitcoin completed strong blowoff tops at the end of both cycle waves I and III. At the end of cycle wave I, the rise for the last eight weeks was vertical. Again, at the end of cycle wave III, the rise for the last eight weeks was vertical (remember, this is a two weekly chart).
Notice that at this time the current rise is not vertical. Current price action looks more like the early stages of cycle waves I and III than their ends.
If my targets are wrong, they may be woefully inadequate. I would not recommend using these targets for exit points for any Bitcoin purchases.
Last analysis of Bitcoin expected more upwards movement, which is so far what is happening.
Primary wave 3 may be complete as labelled. Primary wave 5 may turn out to be only even in length with primary wave 3, but it may well be much longer than that. Within cycle wave III (not shown on this chart, see the two weekly chart above), primary wave 5 was just 26.45 short of 4.236 the length of primary wave 3.
Here, if primary wave 5 were to exhibit the same Fibonacci ratio to primary wave 3, the target would be at 23,626. While this target may seem extreme, it is possible.
At major highs, Bitcoin often exhibits strong candlestick reversal patterns. That is not the case at the last high.
Single divergence with price and RSI at the last high signalled a likely pullback. The question right now is: is this pullback complete?
At the end of pullbacks, Bitcoin does not always see RSI reach oversold. So that may not be useful in timing an entry. There are usually strong candlestick reversal patterns though, and there is one here. The last two days have long lower wicks and the last daily candlestick is very bullish. It is not correctly an engulfing pattern as the open gaps higher, but the close is well above the close of the prior day, which is very bullish.
The risk here is that the pullback is not yet over. Some patience may be required. A smaller position may be entered here, and most powder kept dry for a larger position should Bitcoin move lower.
Published @ 05:45 p.m. EST.
This is not my usual analysis format.
This video will show you how to import data in .csv format into Motive Wave. This is necessary when the data feed used with Motive Wave does not provide data on the market you wish to analyse.
Downwards movement remains above the invalidation points on the daily charts. Price remains within the consolidation zone which it entered back on the 27th of September.
Price does not move in straight lines within consolidations, and Friday’s strong downwards movement is evidence of this fact.
The USD Index continued to move lower as the last Elliott wave analysis expected. The target for a low at primary degree was 94.83. The low was reached 3.01 below the target.
ELLIOTT WAVE ANALYSIS
A Super Cycle degree impulse looks to be incomplete for Super Cycle wave (I).
Cycle waves I, II and now III look complete within Super Cycle wave (I) impulse. Cycle wave III is just 0.50 longer than 1.618 the length of cycle wave I.
Ratios within cycle wave III are: there is no Fibonacci ratio between primary waves 3 and 1, and primary wave 5 is just 0.5 shorter than equality in length with primary wave 1. Primary wave 3 is the longest extension and has the strongest slope.
Cycle wave II was a deep 0.89 single or double zigzag lasting 26 months. Given the guideline of alternation, cycle wave IV may be expected to be a more shallow sideways correction which would likely be longer lasting. So far it has lasted just ten months.
A breach of the maroon Elliott channel provided an indication that cycle wave III was over and cycle wave IV had arrived.
If cycle wave IV is an expanded flat or a running triangle or a combination, then primary wave B or X within it may make a new high above the start of primary wave A or W at 103.82.
Primary wave B or X would most likely be a zigzag, but it may be any corrective structure. It may be a sharp upwards movement or a choppy overlapping time consuming consolidation.
For the short term, while price remains within the narrow yellow channel, assume the trend remains up.
This labelling assumes that primary wave B may be a zigzag. But this labelling may need to change as primary wave B may be any one of more than 23 possible corrective structures.
The blue channel is an Elliott channel about the first five up. This may be intermediate wave (A). Assume the trend remains up while price remains within this channel.
Minute wave iv may not move into minute wave i price territory below 93.79.
Click chart to enlarge. Chart courtesy of StockCharts.com.
ADX is still declining, so it does not yet indicate a trend.
Both the one and two year moving averages are now negatively sloped and price is below both. The one year average may be now crossing below the two year average. This would be a full bore bearish look.
With RSI not oversold and Stochastics exhibiting no divergence with price at lows, there is room for price to fall further.
It is very important to note that at the monthly chart level Gold and the USD Index do not have a reliable negative correlation. At this high time frame, they can spend months not correlated.
Each market should be and will be analysed separately. We cannot expect that analysis of one market showing movement expected in one direction means our analysis of the other market should show it to move in the opposite direction, because the math proves that is not the case often enough. To make this correlation assumption without looking at the math is dangerous to your trading account.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Give the bearish engulfing candlestick pattern weight, because this suggests the Elliott wave count is wrong for the short term and a reasonable pullback or consolidation may develop about here.
The upwards trend here is extreme. Look out for a turn.
This analysis is published @ 03:00 a.m. EST.
Last week’s Silver analysis expected upwards movement to continue for the short term. This is exactly what has happened for the week. The targets remain the same.
Upwards movement continues as expected for this analysis.
On Balance Volume today gives an important signal that will be given reasonable weight in this analysis.