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Some upwards movement was expected, but the target at 1,226 has been passed. The Elliott wave count remains the same, and I have a new alternate for you.

Summary: In the short term upwards movement may end at 1,234. Thereafter, the main wave count expects a downwards wave to end below 1,204.65. I should have a target for that downwards wave for you tomorrow. Alternatively, if price remains above 1,216.77 it is possible that the final upwards wave has begun, but this has a low probability.

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Gold Elliott Wave Chart Daily 2015

Primary wave 4 is complete and primary wave 5 is unfolding. Primary wave 5 may only subdivide as an impulse or an ending diagonal. So far it looks most likely to be an impulse.

Within primary wave 5 intermediate wave (1) fits perfectly as an impulse. There is perfect alternation within intermediate wave (1): minor wave 2 is a deep zigzag lasting a Fibonacci five days and minor wave 4 is a shallow triangle lasting a Fibonacci eight days, 1.618 the duration of minor wave 2. Minor wave 3 is 9.65 longer than 1.618 the length of minor wave 1, and minor wave 5 is just 0.51 short of 0.618 the length of minor wave 1. I am confident this movement is one complete impulse.

Intermediate wave (2) is an incomplete expanded flat correction. Within it minor wave A is a double zigzag. The downwards wave labelled minor wave B has a corrective count of seven and subdivides perfectly as a zigzag. Minor wave B is a 172% correction of minor wave A. This is longer than the maximum common length for a B wave within a flat correction at 138%, but within the allowable range of twice the length of minor wave A. Minor wave C may not exhibit a Fibonacci ratio to minor wave A. Minor wave C is extremely likely to move at least slightly above the end of minor wave A at 1,255.40 to avoid a truncation and a very rare running flat correction. It may end when price touches the upper edge of the maroon channel, copied over here from the weekly chart. To see how to draw this channel click here.

To see a prior example of an expanded flat correction for Gold on the daily chart, and an explanation of this structure, click here.

So far within minor wave C the highest volume is on three up days. This supports the idea that at this stage the trend remains up. Even for the last 13 trading days the highest volume is in four up days.

Minor wave C may be either an impulse or an ending diagonal. With all the overlapping within it, an ending diagonal looks more likely, and it is now within the final fifth wave up. The diagonal is expanding and the trend lines clearly diverge. Expect the final fifth wave of expanding diagonals to fall short of the i-iii trend line. Minute wave v should be longer than equality with minute wave iii which would be achieved at 1,262.94. This would also see minor wave C end above the end of minor wave A at 1,255.40 avoiding a truncation and a very rare running flat.

Within an ending diagonal all the sub waves must subdivide as zigzags. The fourth wave should overlap first wave price territory. The rule for the end of a fourth wave of a diagonal is it may not move beyond the end of the second wave.

Intermediate wave (2) may not move beyond the start of intermediate wave (1) above 1,345.22. I have confidence this price point will not be passed because the structure of primary wave 5 is incomplete because downwards movement from the end of the triangle of primary wave 4 does not fit well as either a complete impulse nor an ending diagonal. If it is seen as a complete impulse there would be inadequate alternation between the single zigzag of the second wave and the double zigzag of the fourth wave correction, and there would be no Fibonacci ratios between the first, third and fifth waves within it.

Main Hourly Wave Count

GOLD Elliott Wave Chart 2015

It is most likely that minuette wave (b) is incomplete. I would judge this main wave count to have about an 85% probability.

Minuette wave (b) at this stage looks like it may be unfolding as an expanded flat correction, which are very common structures. The text above for the daily chart links back to a prior example of an expanded flat within Gold so you may see what these look like when they’re done.

If minuette wave (b) is an expanded flat correction then so far within it subminuette wave b is a 144% correction of subminuette wave a. This is a little longer than the maximum common length of 138%, but still well within the allowable limit of 200%. I have seen plenty of expanded flats with rather long B waves.

Expanded flats subdivide 3-3-5 and the B waves within them often convince us there has been a trend change, right before their C waves move strongly in the opposite direction. I am judging this wave count to have the highest probability because it would be unlikely for minuette wave (b) to have been over in just two days, and because expanded flats are very common.

Within subminuette wave b the structure must subdivide as a three, and this upwards movement looks like it may be a zigzag. At 1,234 submicro wave (5) would reach 0.618 the length of submicro wave (3).

When micro wave C can be seen as a complete five wave structure, with one final upwards wave complete, then subsequent movement below 1,216.77 would confirm this main wave count and invalidate the alternate below. When I know where subminuette wave b has ended I can calculate a target downwards for subminuette wave c for you. I would expect subminuette wave c to most likely be either 1.618 or 2.618 the length of subminuette wave a, so either $30 or $49 in length, depending on how high subminuette wave b goes.

If minuette wave (b) is a flat correction then it is extremely likely that subminuette wave c will move at least slightly below the end of subminuette wave a at 1,204.65 to avoid a truncation and a very rare running flat. Subminuette wave c must subdivide as a five wave structure, most likely an impulse. C waves of expanded flats are normally clear and strong.

It is also still possible (but now much less likely) that minuette wave (b) may be unfolding as a combination or a triangle. These possibilities would expect mostly sideways movement for a few days yet. I will keep these in mind and chart them if they show themselves to be more likely.

Alternate Hourly Wave Count

GOLD Elliott Wave Chart 2015

By simply moving the degree of labelling within minuette wave (b) up one degree it is possible to see that it could be over. However, this wave count has a low probability. It would see minuette wave (b) as lasting only two days, which is more brief than the prior two minuette (b) waves within the larger diagonal structure on the daily chart. This is possible, but unlikely.

A-B-C and 1-2-3 both subdivide 5-3-5. When the 5-3-5 is complete then what happens next should tell us which wave count is correct. A new low below 1,216.77 would invalidate this alternate and confirm the main wave count because micro wave 4 may not move into micro wave 1 price territory.

Once micro wave 3 (which the main wave count sees as micro wave C) is complete and we see a sideways movement which is very corrective and remains above 1,216.77, then at that stage it may be micro wave 4 and minuette wave (c) upwards may be underway. Market behaviour (strongly down or sideways?) will provide clues at that stage as to which wave count is correct.

This analysis is published about 1:40 p.m. EST.