A new low below 1,201.61 invalidated the main hourly Elliott wave count and confirmed the alternate. At that stage more downwards movement was expected.
Summary: A third wave down is unfolding. The target for it to end is 1,124. The alternate wave count is further reduced in probability, and it sees a fifth wave down unfolding with a target at 1,167. Both Elliott wave counts expect to see an increase in downwards momentum over the next one to two days.
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Main Daily Wave Count
This main wave count sees Gold as still within a primary degree downwards trend, and within primary wave 5 intermediate wave (3) is in its early stages. At 956.97 primary wave 5 would reach equality in length with primary wave 1. For Silver and GDX this idea, that the primary trend is down, is the only remaining wave count. This main wave count has a higher probability than the alternate below.
The maroon channel about cycle wave a from the weekly chart is now breached by a few daily candlesticks and one weekly candlestick. If cycle wave a is incomplete this channel should not be breached. The breach of this channel is a warning this wave count may be wrong, and so I will still retain the alternate.
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) is an expanded flat correction. Minor wave C is 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. Expanded flats are very common structures and ending diagonals are more common than leading diagonals.
This wave count has more common structures than the alternate wave count, and it has a better fit.
A new low below 1,131.09 would confirm that a third wave down is underway.
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 fully invalidated.
Draw a channel about minor wave 1: draw the first trend line from the end of minute wave i to the end of minuette wave (iii), then place a parallel copy on the end of minute wave ii. Copy this over to the hourly chart.
From January 23rd onwards, since the expected trend change, volume is highest on down days. This supports the idea that we may have seen a trend change and the trend is now down. Volume for Silver is even clearer, with a big spike on the down day there for 29th January.
Within minute wave iii minuette waves (i) and (ii) are complete. At 1,124 minuette wave (iii) would reach 1.618 the length of minuette wave (i).
Minuette wave (ii) shows up on the daily chart, and it lasts three days. For the wave count to have the right look at the daily chart level minuette wave (iv) should also show up on the daily chart. The next interruption to the downwards trend should come at the end of minuette wave (iii).
This wave count still has the right look and still shows Gold exhibiting very typical behaviour, despite the deep corrections. I have considered the possibility that a leading diagonal (or ending for the alternate below) could be unfolding, but the subdivisions will not fit at all well. I am reasonably confident this is a series of overlapping first and second waves.
The channel drawn here is copied over from the daily chart and it seems to be a good guide to where price is finding support and resistance. The mid line is a useful addition. If this wave count is correct then when the middle of the third wave gathers momentum the lower edge of the channel should be breached and price should then stay below it.
Within micro wave 3 submicro wave (2) may not move beyond the start of submicro wave (1) above 1,215.07.
Alternate Daily Wave Count
At this stage I judge this alternate wave count to have a lower probability. The structure of downwards movement, and momentum, will determine which wave count is correct over the next few weeks. At this stage they both expect more downwards movement so there is no divergence in the expected direction.
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 may be a complete leading expanding diagonal. 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 minor waves 1, 3 and 5 as zigzags.
Leading diagonals are almost always followed by deep second wave corrections, sometimes deeper than the 0.618 Fibonacci ratio. This wave count expects a big deep correction downwards, and it should subdivide as a clear three on the daily chart.
My biggest problem with this wave count 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 it’s vital the subdivisions fit perfectly and this one does not. This problem is very significant.
Within intermediate wave (5) minor wave 3 looks like a three on the daily chart, where it should be a five. This movement may also be labelled with minor wave 3 ending higher and minor wave 5 looking like a three. Either way, one of the actionary waves within this downwards movement will look like a three and not a five which does not have the “right look” at the daily chart level.
Intermediate wave (2) is most likely to subdivide as a zigzag, which subdivides 5-3-5 at minor degree. When this 5-3-5 is complete then how high the following movement goes will tell us which wave count is correct.
Intermediate wave (2) of this new cycle degree trend may not move beyond the start of intermediate wave (1) below 1,131.09.
For this wave count minute waves iii and iv should be over. If minute wave iii was incomplete as labelled for the main hourly wave count this would take minor wave A too low, and would not allow enough room for the zigzag of intermediate wave (2) to unfold.
If minute waves iii and iv are complete then there is inadequate alternation between the 0.61 double zigzag of minute wave ii and the 0.29 triple zigzag of minute wave iv. That they are both of the zigzag family would be unusual for Gold.
My first idea was to see if minute wave v is subdividing as an ending contracting diagonal, but the third wave zigzag will not fit at all. Minute wave v must be subdividing as an impulse, and it is beginning with a series of overlapping first and second waves. This alternate also expects to see an increase in downwards momentum. At 1,167 minute wave v would reach equality in length with minute wave iii.
Within subminuette wave iii micro wave 2 may not move beyond the start of micro wave 1 above 1,215.47.
This analysis is published about 02:50 p.m. EST.