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Downwards movement was expected. The main Elliott wave count is changed substantially today.

Summary: The situation is unclear. Use your own judgement in addition to my analysis to decide which wave count you see as most likely. The main wave count expects one final high to 1,319 before a trend change and the beginning of a consolidation to last at least a week. The two alternates expect a trend change at intermediate degree has just occurred.

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Main Daily Wave Count

Gold Elliott Wave Chart Daily 2015

Now that the channel on the weekly chart is breached for the last main wave count, this is now the main wave count. Yesterday’s main wave count has been substantially reduced in probability.

This wave count sees a five wave impulse down for cycle wave a complete, and primary wave 5 within it a completed five wave impulse. The new upwards trend at cycle degree should last one to several years and must begin on the daily chart with a clear five up. The first five up is most likely to be an impulse which is what this wave count looks at.

My biggest problem with this wave count, and the reason I will retain the second alternate, is the structure of intermediate wave (2) within primary wave 5. This is a rare running flat but the subdivisions don’t fit well. Minor wave C should be a five wave structure, but it looks like a clear three on the daily chart. If you’re going to label a running flat then its vital the subdivisions fit perfectly and this one does not. I still have a big concern with this wave count for this reason.

Intermediate wave (5) still looks like a zigzag rather than an impulse, and has a corrective wave count. This is also a problem I have with this wave count.

This wave count fits with momentum at the daily chart level. The middle of a third wave may have recently passed, and now a series of two more fourth wave corrections and fifth waves up may be required to complete minor wave 3.

Yesterday’s analysis of this idea had the upcoming correction at minute degree, but that was wrong. Only minuette wave (iii) has ended, and minuette wave (iv) has now also probably just ended within Friday’s session. A final last new high may be required before price moves into a consolidation phase lasting at least a week and probably longer for minute wave iv.

Because minute wave ii shows so clearly on the daily chart minute wave iv should also. Minute wave ii lasted 22 days and minor wave 2 one degree higher lasted 9 days. For the wave count to have somewhat the right look minute wave iv to come may last at least 9 days in total. Minute wave ii was a deep 69% correction so minute wave iv should be shallow.

The green channel about minute wave iii is drawn using Elliott’s technique: draw the first trend line from the highs labelled minuette waves (i) to (iii), then place a parallel copy on the low labelled minuette wave (ii). This almost perfectly shows where minuette wave (iv) is recently finding support. Minuette wave (v) may end midway within this channel.

When this green channel is breached by a full daily candlestick below it and not touching it that would provide confirmation that minute wave iv has begun.

GOLD Elliott Wave Chart 2015

This hourly wave count sees the structure within minute wave iii exactly the same as minute wave v did for yesterday’s hourly wave count. If this upwards movement is a third wave and not a fifth wave zigzag, then it needs one final last fifth wave up to complete an impulsive structure.

There is no Fibonacci ratio between minuette waves (i) and (iii). This makes it very likely we shall see a Fibonacci ratio between minuette wave (v) and either of (i) or (iii).

At 1,319 minuette wave (v) would reach 0.618 the length of minuette wave (i).

A new high does not have to be seen, the fifth wave could be truncated, but it is likely it will not. There is persistent and strong divergence now on the hourly chart indicating that the trend is expiring.

Minute wave iv may not move into minute wave i price territory below 1,221.34.

Alternate Daily Wave Count

Gold Elliott Wave Chart Daily Alternate 2015

It is entirely possible that there was a leading expanding diagonal as the first five up within primary wave A. For diagonals, the contracting variety is more common than expanding and ending diagonals are more common than leading. While a leading expanding diagonal is not rare, it is not very common either. This reduces the probability of this wave count to less than the probability of the main wave count above.

Within leading diagonals the second and fourth waves must subdivide as zigzags. The first, third and fifth waves are most commonly zigzags but they may also be impulses. This wave count sees minute waves iii and v as zigzags.

Because minute wave v is a zigzag it would be over here. A-B-C and 1-2-3 (how the main wave count sees this movement) have exactly the same subdivisions. Because I am reasonably confident I have this movement for minute wave c labelled correctly on the hourly chart as a complete five wave impulse this is where the main wave count now diverges from this alternate and the second alternate below. If this upwards wave is a zigzag it must end here. If it is an impulse it needs a final fifth wave up.

If an impulse has just ended (labelled minute wave c) then the main wave count expects only a very small fourth wave correction to be followed by a new high for the fifth wave, where the two alternates expect a trend change at intermediate degree. What happens next over the next few days should tell us what degree the trend change is.

Leading diagonals are almost always followed by very deep second wave corrections, often deeper than the 0.618 Fibonacci ratio. This wave count expects a big deep correction downwards, and should subdivide as a clear three on the daily chart (the main wave count now expects a clear five down).

Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,131.09.

Second Alternate Daily Wave Count

Gold Elliott Wave Chart Daily Alternate II 2015

The maroon channel about cycle wave a from the weekly chart is now breached by three daily candlesticks, and is now also breached on the weekly chart by one weekly candlestick. If cycle wave a is incomplete this channel should not be breached. For this reason this wave count, despite having the best fit in terms of subdivisions, must now be relegated to a very unlikely alternate. It now has to prove itself if it is to be considered with any weight again.

Draw the maroon trend line on a weekly chart on a semi-log scale, and copy it over to a daily chart also on a semi-log scale (see this analysis for a weekly chart).

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.

Intermediate wave (2) may not move beyond the start of intermediate wave (1) above 1,345.22. If this invalidation point is passed this wave count would be invalidated.

Intermediate wave (2) is now a complete expanded flat correction. Minor wave C is longer than 1.618 the length of minor wave A, and there is no Fibonacci ratio between them. Minor wave C is now a complete expanding ending diagonal.

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.

A-B-C and 1-2-3 subdivide exactly the same. For this idea the final zigzag of the ending diagonal must now be complete. If a new high is seen then minute wave v will not be a zigzag and I may discard both the alternate wave counts. But if we see a larger correction develop from here this wave count will still be published, just in case.

Although Gold almost always adheres perfectly to trend channels, almost always is not the same as always. This wave count is still possible. If we see a clear five down begin from here and momentum builds, we may be seeing the beginning of a third wave down.

A new low below 1,131.09 would confirm that a third wave down is underway.

At 956.97 primary wave 5 would reach equality in length with primary wave 1.

This analysis is published about 04:05 p.m. EST.