Downwards movement was expected, with a short term upwards correction to end just above 1,210.44 before the downwards trend resumes.
Summary: The main wave count expects downwards momentum to begin to increase now, and the target remains at 1,124. A new low below 1,190.40 is required for confidence in this idea at this stage. Alternatively, a larger minor degree correction may begin upwards from here. This would be confirmed with a new high above 1,211.96. While price remains below 1,211.96 and above 1,190.40 the situation will be unclear; we need price to break out of this range to clarify what direction should be expected for the short to mid term.
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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.
I am very concerned today that a green candlestick may complete for Wednesday’s session.
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 (i) lasted 6 days. If minuette wave (iii) completes in a Fibonacci 13 days it may end in another six sessions.
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 is expecting downwards momentum to increase as the middle of a third wave unfolds. However, today it is reduced in probability and requires confirmation for that idea to remain viable. Submicro wave (2) lasted 52 hours, much longer than micro wave 2 and even subminuette wave ii two degrees higher. It is beginning to show up on the daily chart with a green candlestick for Wednesday’s session. If Wednesday closes as a green candlestick this idea will further substantially reduce in probability because such a low degree wave should not last that long.
If minute wave iii is extending and getting ready to move through the middle strongest part then this idea now requires confidence below 1,190.40.
The alternate idea below also works for this wave count. It is possible that minor wave 1 is over and minor wave 2 upwards has just begun. A new high above 1,211.96 would confirm this idea. If that happens then I would expect choppy overlapping movement for about three weeks for a deep second wave correction, most likely to reach up to the 0.618 Fibonacci ratio at 1,263.
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.
It is possible to see minor wave A as a completed five wave structure. Within it minute wave v subdivides okay as an ending contracting diagonal, with minuette wave (i) within it very long.
Within the ending diagonal all the sub waves subdivide as zigzags and the fourth wave overlaps first wave price territory, as it must for a diagonal. Minuette waves (ii) and (iv) are both 0.39 corrections of the prior wave down, less than the common length for a second and fourth wave of a diagonal of between 0.66 to 0.81. This slightly reduces the probability of this idea.
Within the zigzag of minuette wave (i) subminuette wave c is seen as an ending contracting diagonal. The wave lengths fit, they are all smaller than the prior wave in the same direction, but the trend lines do not work and they don’t look like they’re contracting. This piece of the wave count looks wrong, further reducing the probability of this idea.
This idea would be my sole wave count for both the main and alternate if it is confirmed with a new high above 1,211.96. Minor wave A would be seen as complete as would minor wave 1 for the main wave count.
For both the main and alternate wave counts minor wave B or minor wave 2 should be a clear three wave structure on the daily chart, it should last about three weeks, and it is most likely to end about the 0.382 or 0.618 Fibonacci ratio of minor wave A or 1 at 1,235 or 1,263.
This analysis is published about 04:08 p.m. EST.