Downwards movement was expected. Because an upwards correction has breached the base channel on the hourly chart, and because downwards momentum has not increased, I have an alternate hourly wave count for you today.
Summary: The short term target for this week is 1,204. I will have confidence in this target when price re-enters the base channel and downwards momentum increases. Movement below 1,230 would provide full confidence. If price moves above 1,251.82 then a second wave correction may be unfolding.
This analysis is published about 07:00 p.m. EST. Click on charts to enlarge.
Gold is still within a large fourth wave correction at primary wave degree which is incomplete.
Primary wave 2 was a rare running flat. Primary wave 4 is unlikely to be a flat correction because it is likely to show structural alternation with primary wave 2.
Primary wave 4 is most likely to be completing as a double combination: zigzag – X – second structure. The second structure labeled intermediate wave (Y) is most likely to be a flat correction. Within the flat correction minor wave B must reach a minimum 90% the length of minor wave A at 1,201.98.
If downwards movement does not reach 1,201.98 or below then intermediate wave (Y) may not be a flat correction and may be a contracting triangle. I will keep this alternate possibility in mind as this next wave down unfolds. If it looks like a triangle may be forming I will again chart that possibility for you.
It remains possible that primary wave 4 in its entirety is a huge contracting triangle. I will again publish this idea daily for you.
Overall a double combination for primary wave 4 should take up time and move price sideways, and the second structure should end about the same level as the first at 1,434. Primary wave 4 may not move into primary wave 1 price territory. This wave count is invalidated with movement above 1,532.90.
Within intermediate wave (Y) minor wave B downwards is an incomplete corrective structure, and at this stage the structure is most likely to be a single zigzag with a nine wave triangle for minute wave b. At 1,178 minute wave c would reach equality in length with minute wave a. This would see minor wave B 101% the length of minor wave A and so intermediate wave (Y) would be a regular flat correction. If minute wave c also shows equality with minute wave a in duration they both may last 11 days. So far minute wave c has lasted only six days.
I have drawn a channel about minor wave B downwards: draw the first trend line from the start of minute wave a to the end of minute wave b, then place a parallel copy upon the end of minute wave a. I will expect downward movement to find support at the lower end of this channel due to this being the most common place for minute wave c to end.
Within minute wave c no second wave correction may move beyond the start of its first wave above 1,293.47.
Main Hourly Wave Count.
This remains the main wave count today, but the breach of the upper edge of the base channel gives slight cause for concern and is the reason for the alternate below.
There are no adequate Fibonacci ratios between subminuette waves i, iii and v within minuette wave (i).
This main wave count still has a higher probability. It is a little unusual for a second wave correction to breach the base channel of a first and second wave one or more degrees higher, but it is not impossible. Sometimes this happens.
If minuette waves (i) and (ii) are complete then at 1,182 minuette wave (iii) would reach 1.618 the length of minuette wave (i).
Within minuette wave (iii) at 1,204 subminuette wave iii would reach 2.618 the length of subminuette wave i.
Subminuette wave iii should show a strong increase in downwards momentum, and should breach the lower edge of the green base channel. Once the channel is breached the lower edge may provide resistance to upwards corrections.
Within micro wave 3 no second wave correction may move beyond the start of its first wave above 1,251.82.
If this main hourly wave count is invalidated with upwards movement within the next 24 hours then I would use the alternate below.
Alternate Hourly Wave Count.
It is possible that minuette wave (i) may have just ended with an extended fifth wave ending contracting diagonal.
The diagonal is imperfect because the third wave is the longest although the diagonal is contracting.
Within minuette wave (i) ratios are: subminuette wave iii has no Fibonacci ratio to subminuette wave i, and subminuette wave v is 2.04 longer than equality with subminuette wave iii.
Within minuette wave (ii) if subminuette wave b (or x) moves lower it may make a new low below the start of subminuette wave a (or w). Once subminuette wave b (or x) is twice the length of subminuette wave a (or w) at 1,230 then the probability of this wave count significantly reduces and at that stage this alternate should be discarded.
Minuette wave (ii) may end at a Fibonacci ratio of minuette wave (i), and is slightly more likely to end at the 0.618 Fibonacci ratio.
Minuette wave (ii) may not move beyond the start of minuette wave (i) at 1,293.47.
Daily – Triangle.
It remains possible that primary wave 4 in its entirety is a huge regular contracting triangle.
So far one of the five subwaves of the triangle subdivides into a double zigzag. All the other four subwaves must then be simple corrections, and three of them must be single zigzags. The fourth may be another type of simple A-B-C correction, and most commonly it would also be a zigzag.
Intermediate wave (D) would most likely be incomplete for the triangle to have a typical look. Intermediate wave (D) may end between 1,233 and 1,213, 75% to 85% the length of intermediate wave (C), which in my experience is a typical wave length for a triangle subwave.
Intermediate wave (D) may not move beyond the end of intermediate wave (B) for a contracting triangle. For a barrier triangle intermediate wave (D) may end about the same level as intermediate wave (B) as long as the B-D trend line remains essentially flat. In practice this means that intermediate wave (D) may end very slightly below the end of intermediate wave (B). This lower invalidation point is not black and white. This is the only Elliott wave rule which is not black and white.
Intermediate wave (E) may not move beyond the end of intermediate wave (C) for either a contracting or barrier triangle.