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Upwards movement was expected, with Friday’s session completing a green candlestick which fits the Elliott wave count. I have a new main and alternate Elliott wave count for you to end the week, and I am more satisfied that the subdivisions and ratios are a better fit.

Summary: I expect to see an increase in upwards momentum over the next few days to a target at either 1,240 – 1,243 or 1,245.

Click on charts to enlarge.

Main Daily Wave Count

Gold Elliott Wave Chart Daily 2015

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.

I am adjusting the wave count within minor wave 1 downwards to see it over earlier and minor wave 2 unfolding as an expanded flat. Ratios within minor wave 1 are: there is no Fibonacci ratio between minute waves iii and i, and minute wave v is 1.67 short of 0.618 the length of minute wave i.

GOLD Elliott Wave Chart 2015

I was not satisfied with the odd looking subdivisions in the last main hourly wave count so I have spent some time to see if there is a better fit.

If minor wave 1 ends earlier then within it there is now a Fibonacci ratio between minute waves v and i. Within minor wave 1 minute wave v ended right at the lower trend line of the channel drawn using Elliott’s first technique. Minute wave ii is a deep 0.61 double zigzag and minute wave iv is a shallow 0.29 triple zigzag, so there is some alternation between them although not as much as normal for Gold.

Minor wave 2 may be unfolding as an expanded flat correction. Within the expanded flat of minor wave 2 minute wave a itself subdivides perfectly as an expanded flat with minuette wave (b) as a 187% correction of minuette wave (a), and there is no Fibonacci ratio between minuette waves (a) and (c) (but that is not unusual for Gold).

Minute wave b subdivides perfectly as a double zigzag and it is a 174% correction of minute wave a. Minute wave c should be expected to be longer than 1.618 the length of minute wave a in order for it to move above the end of minute wave a avoiding a truncation and a rare running flat. At 1,240 minute wave c would reach 2.618 the length of minute wave a. This is just below the 0.382 Fibonacci ratio of minor wave 1 at 1,243, giving a $3 target zone.

Minor wave 1 lated 18 days, with no Fiobnacci duration. So far minor wave 2 has lasted 8 days. If it ends in three more days at 11 days total it may be 0.618 the duration of minor wave 1. Or it could continue for another five days and total a Fibonacci 13.

So far the upper edge of the parallel channel copied over from the daily chart continues to provide resistance. Once price manages to break above this with at least one full hourly candlestick above the upper pink trend line and not touching it, then I would expect momentum to increase as the middle of a third wave within minute wave c unfolds.

Within micro wave 3 no second wave correction may move beyond its start below 1,204.53.

Please note: because 1-2-3 and A-B-C of a zigzag subdivide in exactly the same way (they both subdivide 5-3-5) this idea also works for the alternate below. There, intermediate wave (2) may not be over and minor wave B may also be unfolding as an expanded flat correction.

Alternate Daily Wave Count

Gold Elliott Wave Chart Daily Alternate 2015

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. It is possible now to see intermediate wave (2) as a deep 0.67 single zigzag. If it is over it may have lasted just a little under half the duration of intermediate wave (1).

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) of this new cycle degree trend may not move beyond the start of intermediate wave (1) below 1,131.09. I am leaving the invalidation point on the daily chart here because it is still possible that intermediate wave (2) is not over, because it may be continuing as per the main hourly wave count above.

Gold Elliott Wave Chart Hourly Alternate 2015

The biggest difference here in terms of subdivisions on the hourly chart from the main hourly chart above is how I am seeing the wave down here labelled minor wave C. For the main hourly wave count I am seeing this move down as a double zigzag, but it can also fit as an impulse. It is ambiguous.

If minor wave C is an impulse then minute wave iii is just 0.43 short of equality in length with minute wave i, and there is no Fibonacci ratio between minute wave v and either of i or iii. There is perfect alternation between the deep 0.57 expanded flat of minute wave ii and the more shallow 0.39 zigzag of minute wave iv.

If intermediate wave (2) is over then intermediate wave (3) upwards may have begun. It would be beginning with a series of overlapping first and second waves, and so an increase in upwards momentum should be seen also for this alternate idea.

This analysis is published about 02:13 p.m. EST.