The invalidation point on the daily chart was breached indicating a trend change.
A downwards day, which was expected as most likely, followed the blow off top.
Upwards movement continues and price has remained within the upper half of the channel on the hourly chart, which was expected at this stage.
Trading advice is given to members to manage long positions towards the end of this week.
An upwards breakout was again expected, but price remains range bound.
Price moved strongly higher exactly as the Elliott wave count expected for a third wave up. Targets remain the same.
Price has moved overall higher as expected from the main hourly Elliott wave count in last analysis.
Another upwards day sees the main and alternate Elliott wave counts switched over.
What is now the alternate Elliott wave count still remains viable. It illustrates the risk today to trading based upon the main Elliott wave count.
Gold has had a trend change. How high this next wave goes and what structure it takes will indicate which Elliott wave count at the monthly chart level may be correct.
A small inside day fits the preferred expectations for Gold, but all Elliott wave counts still remain valid. Targets remain the same.
The main Elliott wave count was invalidated with a new low below 1,204.05, and the target at 1,203 was inadequate for the alternate Elliott wave count.
The main Elliott wave count expected downwards movement and the alternate expected upwards movement.
A new high above 1,283.63 has favoured what was yesterday’s alternate wave count.
Upwards movement was expected for Friday.
Price moved sideways to complete a small inside day and a green candlestick.
Downwards movement was expected from yesterday’s analysis.
Summary: While price remains within the narrow pink channel, then assume the short term downwards trend remains intact. If the channel is breached and if price moves above 1,330.01, then assume the upwards trend has most likely returned.
New updates to this analysis are in bold.
Last weekly charts are here.
Grand SuperCycle analysis is here.
DAILY ELLIOTT WAVE COUNT
Primary waves 1 and 2 are complete. Thereafter, this wave count differs from the two alternates.
This main wave count will expect primary wave 3 to be longer than primary wave 1. Because this is very common, this is the main wave count and it expects the most common scenario is most likely. At 1,582 primary wave 3 would reach 1.618 the length of primary wave 1.
Only intermediate wave (1) so far is complete within primary wave 3. Intermediate wave (2) may be close to completion. It may find support at the lower edge of the base channel drawn about primary waves 1 and 2. Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,200.07
Primary wave 3 may only subdivide as an impulse.
Minute wave iv should now be complete. A breach of the dark blue channel drawn about intermediate wove (2) would provide trend channel confirmation that intermediate wave (2) is over and intermediate wave (3) is underway.
At this stage, a new high above 1,330.01 could not be a continuation of minute wave iv, so at that stage minute wave iv and minor wave C would have to be over. A new high above 1,330.01 would provide strong confidence in a trend change and the resumption of the prior upwards trend.
At 1,288 minute wave v would reach equality in length with minute wave i. If this target is wrong, it may be slightly too high. Price may find strong support at the lower edge of the base channel; this trend line may stop price moving lower.
Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,200.07.
Primary wave 2 lasted 56 days (one more than a Fibonacci 55). So far intermediate wave (2) is more brief in duration. It has lasted 40 days and may be just one or two days away from completion.
Keep the small narrow pink channel on daily and hourly charts. Draw a channel about intermediate wave (2) using Elliott’s technique for a correction (blue lines). Price is finding support at the lower edge. If this wave count is wrong, then it may be in expecting more downwards movement. The lower edge of this channel may stop price from falling further.
With this wave count expecting a third wave at two large degrees to begin very soon, look out for surprises to the upside at this stage.
HOURLY ELLIOTT WAVE COUNT
Minor wave C must subdivide as a five wave structure.
Within minor wave C, the structure may be still incomplete. Minute wave iv may have been a relatively brief and shallow zigzag exhibiting only alternation in depth with minute wave ii.
At 1,288 minute wave v would reach equality in length with minute wave i.
So far, for this main wave count, the structure within minute wave v looks incomplete. There is too much overlapping for the middle of its third wave to have passed. This wave count expects to see another one or two days of downwards movement.
Within minuette wave (iii), no second wave correction may move beyond the start of its first wave above 1,315.89.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
This alternate is new.
It is possible that minute wave iv was over more recently as labelled. There is still only alternation in depth between minute waves ii and iv. Both are zigzags.
Minute wave iv may be very close to completion. It may end when price again touches the lower edge of the dark blue channel. After a final slight new low below the end of minuette wave (iii) at 1,305.32, then intermediate wave (2) could be over.
Thereafter, a breach of the narrow pink channel that contains recent downwards movement would provide some confidence in a trend change. A new high above 1,315.89 would provide first price confidence. A new high above 1,330.01 would provide stronger confidence. At that stage, upwards movement could not be a continuation of minute wave iv, so minute waves iv and v would have to be over.
ALTERNATE DAILY ELLIOTT WAVE COUNT
It is possible that primary wave 3 is over and shorter than primary wave 1. Primary wave 3 shows stronger volume than primary wave 1 (see technical analysis weekly chart).
If primary wave 3 is over, then the current consolidation for Gold would be primary wave 4.
Primary wave 2 was a relatively shallow 0.35 expanded flat correction. Primary wave 4 may be unfolding as a deeper zigzag which would exhibit perfect alternation.
Primary wave 4 may not move into primary wave 1 price territory below 1,282.68.
Primary wave 5 would be limited to no longer than equality in length with primary wave 3, so that the core Elliott wave rule stating a third wave may not be the shortest is met. Primary wave 5 would have a limit of 174.84.
This wave count expects more downwards movement to complete a five wave impulse for intermediate wave (C) in the same way as the main wave count expects a five wave impulse down to complete minor wave C. Only the degree of labelling differs; this wave count is one degree higher.
The hourly charts would be exactly the same except for the degree of labelling.
It is no longer possible for intermediate wave (4) to be a triangle. Within a contracting or barrier triangle, minor wave C may not move beyond the end of minor wave A. If intermediate wave (4) is labelled as a triangle, then minor wave A would be at the low of 1,310.84. The new low today to 1,305.82 invalidates this idea, so this may not be minor wave C.
A strong downwards week with an increase in volume supports the main and alternate III wave counts. Overall, volume is still declining and price remains range bound.
The prior two green weekly candlesticks had long upper shadows which was bearish.
Price may find some support about 1,310.
On Balance Volume at the end of last week has come down to find support at the purple trend line. This may help to stop price falling much further.
RSI is not extreme. There is some hidden bullish divergence with price and RSI: RSI has made a lower low below the low of 25th of July but price has made a higher low. This indicates some weakness to this downwards movement. It is more likely to be a smaller correction than a sustainable trend.
Price is still range bound and today has reached support. During this range bound period, which began back on 7th of June, it is two upwards days of 8th of July and 26th of August that have strongest volume. This suggests an upwards breakout is more likely than downwards. This trick usually (not always) works well for Gold. This supports the Elliott wave counts.
Volume today is slightly stronger than yesterday, but it is still relatively light.
Price should be expected to find strong support about 1,310 to 1,305. This is an area of prior resistance and support.
On Balance Volume may be finding support today at the yellow trend line. A break below this yellow line would be a bearish signal, but only a weak one because this line has recently been weakened. A break above the purple line would be a bullish signal.
RSI is not yet extreme. There is room for price to fall further. There is no divergence today to indicate weakness between price and RSI.
ADX continues to decline indicating the market is not trending. The +DX and -DX lines continue to whipsaw about each other, typical of a consolidating market. ATR continues to agree as it too is declining.
No clear trend is evident. This downwards movement looks like a swing within a larger consolidation.
Stochastics is oversold and exhibits multi day divergence now with price. With price now at support, an end to this downwards swing would be a reasonable expectation. An upwards swing should be expected to begin about here.
Bollinger Bands are beginning to widen for five days in a row. A trend may be about to return.
The shorter term 13 day moving average is pointing downwards and price is below it. The short term trend is down. The mid term 55 day moving average has just turned and is also pointing downwards today. This indicates the mid term trend may have changed to down. The shorter 13 day average has not yet crossed below the mid term 55 day average yet though, so a trend change has not yet been indicated from up to down.
This analysis is published @ 09:32 p.m. EST.
[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]