The target at 1,214 was met. However, the Elliott wave structure is incomplete with conditions entering oversold and On Balance Volume again at support.
Downwards movement was expected to start the new trading week, but this is not what happened.
Price has moved sideways to complete a very small inside day. The analysis is essentially unchanged.
Upwards movement was expected for Tuesday’s session but did not happen.
Price moved lower but remains above the invalidation point.
A little upwards movement was followed by some downwards movement, exactly as expected.
Yesterday’s analysis expected downwards movement.
Price continued lower, which is what the wave count expected while price remained within the channel.
Price has moved a little lower after a channel breach of the hourly chart. The long term Elliott wave targets remain the same.
A small inside day has not clarified which Elliott wave count is correct.
A small correction followed by more upwards movement is exactly what was expected.
Summary: If price remains above 1,255.66 and makes a new high above 1,266.27, then it would be most likely that a third wave up is underway towards 1,327. Alternatively, a new low below 1,255.56 would indicate that a second wave correction is deepening towards 1,243.50. The trend for Gold remains up with a fifth wave up underway. Although the hourly wave counts are labelled “main” and “alternate” they have an even probability; price will tell us which one is correct within the next 24 hours.
New updates to this analysis are in bold.
Last published weekly chart is here.
DAILY ELLIOTT WAVE COUNT
Gold has very likely changed from bear to bull.
So far, within the first five up, the middle of the third wave is now most likely complete. The strongest move may still be ahead. Gold often exhibits swift strong fifth waves typical of commodities.
Ratios within minor wave 3 are: there is no Fibonacci ratio between minute waves iii and i, and minute wave v is just 0.07 short of 1.618 the length of minute wave i.
There is perfect alternation between the deep double zigzag of minor wave 2 and the very shallow 0.23 expanded flat correction of minor wave 4.
Minor wave 4 is within the price territory of one lesser degree. Minute wave iv has its range from 1,261.94 to 1,190.9.
Upwards movement has confirmed that the last wave down within minor wave 4 is complete. The probability that minor wave 4 in its entirety is complete is high. Within minor wave 5, no second wave correction may move beyond the start of its first wave below 1,225.95.
Minor wave 1 lasted one day. Minor wave 2 lasted nine days (one longer than a Fibonacci eight). Minor wave 3 lasted fifty four days (one short of a Fibonacci fifty five). Minor wave 4 lasted seven days (one short of a Fibonacci eight).
At this stage, minor wave 5 may be expected to last either a Fibonacci five or eight days. It may be swift and strong but not necessarily extended. It is very likely to end with a strong upwards day on a volume spike.
MAIN HOURLY ELLIOTT WAVE COUNT
There is now a clear five up on the hourly chart. This provides further confidence that minor wave 4 is most likely over.
Ratios within minute wave i are: there is no Fibonacci ratio between minuette waves (i) and (iii), and there is no Fibonacci ratio between minuette wave (v) and either of (i) or (iii).
Minor wave 5 must subdivide as a five wave structure, either an impulse or an ending diagonal.
If minor wave 5 is unfolding as an impulse, then within it minute wave i is complete. The question today is whether or not minute wave ii is complete.
Minute wave ii may be complete as a relatively quick shallow zigzag ending just short of the 0.382 Fibonacci ratio. It shows on the daily chart as a small green doji. This is possible if minor wave 5 is not going to be a long extension like minor wave 3. As price fell for minute wave ii, it comes on declining volume at the hourly chart level. This fall in price is not supported by volume. This looks like a correction and not a new trend.
The middle of the third wave of minuette wave (iii) has strongest volume. Minuette wave (iii) has strongest momentum within minute wave i. This wave count fits the volume profile and fits with MACD.
At 1,327 minute wave iii would reach 1.618 the length of minute wave i.
At 1,338 minor wave 5 would reach 2.618 the length of minor wave 1.
Within minute wave iii, no second wave correction may move beyond its start below 1,255.66.
A new high above 1,266.27 would add confidence to this hourly wave count as at that stage the alternate below would reduce in probability.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
Although this is labelled an alternate hourly wave count, it is my judgement that it has an even probability with the main hourly wave count. We need to let price tell us which one is correct.
Minute wave ii may be incomplete. It would most likely continue lower as a double zigzag.
Within a double zigzag, the purpose of the second zigzag is to deepen a correction when the first zigzag does not move price deep enough. To achieve this purpose X waves within double zigzags are normally shallow and often also quick.
For minuette wave (x) to be shallow it would be unlikely to move above the start of subminuette wave c within minuette wave (w) at 1,266.27. A new high above 1,266.27 would reduce the probability of this wave count in favour of the main hourly wave count.
A new low below 1,255.66 would invalidate the main hourly wave count in favour of this alternate. At that stage, expect it is most likely that minute wave ii is continuing lower as a double zigzag. The most likely target for it to end is the 0.618 Fibonacci ratio of minute wave i at 1,243.50.
The green channel is drawn using Elliott’s first technique about minute wave i. Minute wave ii should be expected to be very likely to break out of this channel.
Minute wave ii may not move below the start of minute wave i at 1,225.95.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Thursday’s small red candlestick with a long upper shadow is more bearish than bullish. The small real body and small range for Thursday indicate indecision, a balance between bulls and bears with the bears winning. A slight increase in volume for this small downwards day is not of great concern, but it is of very slight concern. It indicates that a little more downwards movement may be likely as there is some support for the fall in price from volume. This favours the alternate hourly Elliott wave count.
Price has not yet broken out of a trading range between about 1,280 and 1,225 delineated by pink trend lines. We need to see a breakout above or below this range to have confidence that the next wave up or down is underway.
During this consolidation, which began back on 7th March, it is still an upwards day which has strongest volume. This indicates an upwards breakout is more likely than downwards, and this supports the Elliott wave count.
ADX is flat to slightly declining, indicating the market is not yet trending; it is still consolidating. A range bound trading approach is indicated or stepping aside and waiting for a breakout.
Price recently found support and is moving up. A range bound approach would expect upwards movement to overall continue and to not end until price finds resistance and Stochastics is overbought at the same time.
ATR over the last few days has begun to level off. It is now indicating that the market is not trending; it is consolidating. Both ADX and ATR are lagging indicators as they are both based on 14 day averages.
On Balance Volume may be useful in conjunction with volume bars to indicate the next direction for price. A break below the orange line would be bearish. A break above the green line would be bullish. OBV has come down again to find support at the orange line. If this line holds and OBV turns upwards for the next day, then the strength of that line will be reinforced, and this would be a reasonable bullish signal.
This analysis is published @ 07:48 p.m. EST.
[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]
Last analysis expected a correction should continue.
Although price breached a short term upper invalidation point the red candlestick with a long upper shadow fits a correction.
Downwards movement on lighter volume fits the profile of a continuing correction for Gold.
Upwards movement was expected.