More upwards movement was allowed for and has remained below the invalidation point and trend line on the Elliott wave hourly chart.
Summary: I expect a third wave down is underway. The short term target for the end of the middle of the third wave is at 1,224 and this may be met in about two or three days time. The mid term target for the third wave to end is either 1,196 or 1,140 which may be met in about one and a half to two weeks time. There is an alternate possibility that a second wave correction could continue sideways before the middle of the third wave begins.
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Main Daily Wave Count
At this stage I judge this main wave count to have an even probability with the alternate below. I will let the structure of downwards movement, and momentum, tell us 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 (the alternate below expects a five down).
My biggest problem with this wave count, and the reason I will retain the 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 it’s vital the subdivisions fit perfectly and this one does not. This problem is very significant and this is why I judge the two wave counts to be about even in probability.
Intermediate wave (5) 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.
Intermediate wave (2) is most likely to subdivide as a zigzag, which subdivides 5-3-5. 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.
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.
First Hourly Chart
Minuette wave (ii) shows on the daily chart as two candlesticks, one of them green. I would expect the upcoming minuette wave (iv) to also show on the daily chart and to last at least two days.
At 1,224 minuette wave (iii) would reach 1.618 the length of minuette wave (i).
So far the first five down within minuette wave (iii) may be complete: subminuette wave i subdivides perfectly as a five wave impulse. The following correction for subminuette wave ii may not move beyond the start of subminuette wave i above 1,274.23.
I have adjusted the base channel to be a best fit. Subminuette wave ii should find resistance at the upper edge of this green trend channel. Subminuette wave ii should look like a clear three wave movement on the hourly chart. It is unlikely to show on the daily chart as a green candlestick and it should be over quickly.
If subminuette wave ii breaks above resistance at the upper green trend line then the alternate idea below may be correct. Any movement above 1,274.23 would invalidate this first hourly wave count and confirm the alternate below.
Second Hourly Chart
Thursday’s session produced a slight new high and a red candlestick. I am concerned that volume is lower though and a new low was not made. For this reason I am considering this alternate idea.
It is possible that minuette wave (ii) is incomplete and may make a slight new high beyond the previous high of 1,274.23 for 5th February.
This wave count sees minuette wave (ii) as a longer lasting regular flat correction, moving mostly sideways. If this is correct then it may complete in three days total, even in duration with minute wave ii one degree higher. This is entirely possible and would still have the right look on the daily chart.
Subminuette wave b is a 94% correction of subminuette wave a. Subminuette wave a subdivides as a three wave structure, and this indicates a regular flat for minuette wave (ii).
Subminuette wave b is an expanded flat correction: micro waves A and B are both three wave structures and micro wave B is a 156% correction of micro wave A. Micro wave C is just 0.18 short of 1.618 the length of micro wave A.
Subminuette wave c has already moved above the end of subminuette wave a at 1,267.94 avoiding a truncation. Subminuette wave c must subdivide as a five wave structure. At 1,276 subminuette wave c would reach 1.618 the length of subminuette wave a.
Minuette wave (ii) should find resistance at the upper edge of a base channel drawn about minute waves i and ii. It should not breach this base channel.
When minuette wave (ii) is complete then the following downwards movement should show a strong increase in downwards momentum, and it should have the power to break below support at the lower edge of the pink base channel.
Alternate Daily Wave Count
The maroon channel about cycle wave a from the weekly chart is now breached by a few 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, only has an even probability with the main wave count. It will prove itself if we see a clear five down with increasing momentum on the daily chart.
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 now a complete expanded flat correction. Minor wave C is a complete expanding ending diagonal. Expanded flats are very common structures.
This wave count has more common structures than the main wave count, and it has a better fit.
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.
Although Gold almost always adheres perfectly to trend channels, almost always is not the same as always. This wave count is still possible. The trend channel breach is a strong warning that this wave count may be wrong and we need to heed that warning with caution at this stage.
A new low below 1,131.09 would confirm that a third wave down is underway.
When the first 5-3-5 down is complete on the daily chart this wave count would see it as minor 1-2-3 and the main wave count would see it as minor A-B-C. The following upwards movement will tell us which wave count is correct. If it moves back into price territory of the first 5 down (minor wave A on the main wave count and minor wave 1 for this alternate) then it can’t be a fourth wave correction so the main wave count would be correct. If it remains below the price territory of the first five down then it would be a fourth wave correction and this alternate would be correct. This divergence will not begin for a few weeks.
At 956.97 primary wave 5 would reach equality in length with primary 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 fully invalidated.
The short term structure, targets and invalidation points are still the same for both wave counts at this stage. They probably won’t diverge for a few weeks. In order to keep the number of charts down to only those necessary I will not publish separate hourly charts for this alternate daily wave count today. It would be exactly the same as the two hourly charts for the main wave count.
This analysis is published about 04:40 p.m. EST.