Movement above 1,231.74 invalidated the main hourly wave count and confirmed the alternate. At that stage the wave count expected more upwards movement.
The wave count remains the same.
Click on the charts below to enlarge.
Gold is still within a large fourth wave correction at primary wave degree which is incomplete. To see a full explanation of my reasoning for expecting that primary wave 4 is not over and is continuing see this.
Movement above 1,277.97 would provide confirmation that primary wave 4 is not over. At that stage upwards movement could not be a fourth wave correction within primary wave 5 because it would be in its first wave price territory, and the downwards movement labeled intermediate wave (X) would be confirmed as a completed three wave structure.
Primary wave 2 was a rare running flat correction, and was a deep 68% correction of primary wave 1. In order to show alternation in structure primary wave 4 may be a zigzag, double zigzag, combination, triangle or even an expanded or regular flat. We can rule out a zigzag because the first wave subdivides as a three. This still leaves several structural possibilities.
The downwards wave labeled intermediate wave (X) is now 99% the length of the upwards wave labeled intermediate wave (W). Primary wave 4 is most likely to be a combination or triangle in order to show structural alternation with the running flat of primary wave 2.
Primary wave 4 is less likely to be a flat correction because if it were it would be a regular flat. These have similar behaviour and a similar look to running flats, and so there would be little structural alternation between primary waves 2 and 4.
Draw a parallel channel about minor wave C downwards (pink channel) with the first trend line from the highs labeled minute waves ii to iv, then place a parallel copy upon the low labeled minute wave iii. When this channel is clearly breached by upwards movement with a full daily candlestick above the channel and not touching the upper trend line, then we shall have trend channel confirmation that minor wave C is complete and the next wave is underway.
When the channel about intermediate wave (X) is finally breached by upwards movement then I would consider that final confirmation that intermediate wave (Y) is underway.
Primary wave 4 is most likely to be a combination rather than a double zigzag because of the depth of intermediate wave (X). Double combinations take up time and move price sideways, and their X waves can be very deep. Double zigzags are different because their purpose is to deepen a correction when the first zigzag does not move price deep enough. Thus intermediate wave (Y) is most likely to be a flat correction, and less likely a triangle and least likely a zigzag. It is most likely to end about the same level as intermediate wave (W) at 1,434 so that the whole structure moves sideways. It may last about 43 to 89 days, depending upon what structure it takes.
If intermediate wave (Y) is a flat correction then within it minor wave B must retrace a minimum of 90% the length of minor wave A, and it may make a new low below 1,180.84. This invalidation point will only apply while minor wave A is incomplete.
If intermediate wave (Y) is a flat correction then within it minor wave A must subdivide as a three wave structure. This is most likely to be a zigzag, but it may also be a flat correction (or a double). It may not be a triangle. The main hourly wave count looks at the most likely structure of a zigzag. The alternate hourly wave count will look at the next likely structure of a flat correction. At this stage the two hourly wave counts do not diverge; they expect exactly the same direction next and their targets are the same. They will diverge in coming weeks and so we will have to be aware of both possibilities.
Primary wave 4 may not move into primary wave 1 price territory. This wave count is invalidated with movement above 1,532.90.
Main Hourly Wave Count.
Minor wave A has most likely begun and is most likely unfolding as a zigzag, subdividing 5-3-5. Within minute wave a of the zigzag the structure can only be an impulse or a leading diagonal. The most likely structure is an impulse.
Minuette wave (iii) has begun and is moving towards the middle where we should see an increase in upwards momentum. At this stage the target remains the same, at 1,263 minuette wave (iii) would reach equality in length with minuette wave (i).
If price rises through the first target at 1,263 then the next calculated target is at 1,293 where minuette wave (iii) would reach 1.618 the length of minuette wave (i). If this second target is reached then I would increase the degree of labeling within this upwards movement, and I would expect that that would be the end of minute wave (iii) within minor wave A.
I will use MACD as an indicator of momentum. MACD should show an increase beyond that seen for the end of minuette wave (i), and the increase should be reasonable to significant. So far only a slight increase in momentum has been seen.
There is a breach of the pink parallel channel on the hourly chart. I still want to see a clear breach of this channel on the daily chart with a full daily candlestick above this channel and not touching the upper trend line. At that stage I would have full confidence in a trend change at intermediate wave degree.
Within subminuette wave iii micro wave 2 may not move beyond the start of micro wave 1. This wave count is invalidated with movement below 1,227.11.
Alternate Hourly Wave Count.
If minor wave A is unfolding as a flat correction then it should subdivide 3-3-5. The first wave upwards of minor wave A is minute wave a and this would most likely be a zigzag.
If minute wave a is unfolding as a zigzag then within it minuette waves (a) and now (b) may be complete. Minuette wave (c) looks like it is unfolding as a simple impulse and it is incomplete. This wave count also requires more upwards movement at this stage, and the targets and invalidation points are the same.
Alternate Daily Wave Count – Triangle.
It is also possible that primary wave 4 may continue as a regular contracting (or barrier) triangle.
The expected direction of this next upwards wave is the same, but for this alternate intermediate wave (C) of the triangle may not move beyond the end of intermediate wave (A). Intermediate wave (C) must subdivide as a zigzag or double zigzag. The triangle is invalidated with movement above 1,438.83.
Intermediate wave (C) must unfold as either a single or double zigzag. Within it no second wave correction, nor wave B of the zigzag, may move beyond the start of the first wave or A wave. This wave count is invalidated with movement below 1,180.84.
The final intermediate wave (E) upwards may not move above the end of intermediate wave (C) for both a contracting and barrier triangle. E waves most commonly end short of the A-C trend line.
All five subwaves of a triangle must divide into corrective structures. If this next upwards movement subdivides as a zigzag which does not make a new high above 1,438.83 then this alternate would be correct.
Triangles take up time and move price sideways. If primary wave 4 unfolds as a triangle then I would expect it to last months rather than weeks.
Please find an alternate labelling:
Wave A is an impulse. Wave B is a zigzag. Wave C is an ending diagonal. There is a bearish divergence with the RSI that could indicate a reversal is coming. I also like your analysis, that implies a surge in momentum in order to have a third wave.
it was a good idea… until the market continued upwards from there.
Hi Lara. Is it possible that Friday’s high at 1240 was a Fifth wave of wave 1, now meaning that a wave 2 correction will follow?
It’s extremely difficult to see that upwards movement as a completed impulse, because of the overlapping which I have labeled a leading diagonal for subminuette wave i. I cannot see a third wave in the middle of that.
If you can see it then do post a chart.