Downwards movement continues, although yesterday’s hourly Elliott wave count expected some upwards movement first which did not happen.
Summary: The trend remains down. Two more small fourth wave corrections should complete, and the current one may end about 1,176. I expect another red candlestick for Wednesday’s session. Overall, downwards movement should continue with a decrease in momentum, although we should still look out for a possible strong fifth wave typical of commodities. The target for minor wave 3 remains the same at 1,055.
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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) has begun. 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.
Within cycle wave a primary wave 1 lasted a Fibonacci 3 weeks, primary wave 2 lasted 53 weeks (two short of a Fibonacci 55), primary wave 3 lasted 37 weeks (three more than a Fibonacci 34), and primary wave 4 lasted 54 weeks (one short of a Fibonacci 55).
Primary wave 5 is now in its 35th week and the structure is incomplete. The next Fibonacci number in the sequence is 55 which would see primary wave 5 continue for a further 20 weeks, give or take up to three either side of this number. Although I am expecting primary wave 5 to be equal in length with primary wave 1 that does not mean it must also be equal in duration.
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).
To see daily charts showing the whole of intermediate wave (1) from its start at 1,345.22, and an explanation of why this main wave count has a higher probability than the alternate, see the last analysis showing charts to that date here.
A new low below 1,131.09 would confirm that intermediate wave (3) 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.
Within intermediate wave (3) minor wave 1 is a completed impulse lasting 18 days. Minor wave 2 is a completed double flat correction which lasted 9 days, exactly half the duration of minor wave 1. Because this is a second wave correction within a third wave one degree higher I would expect it to be more shallow than normal.
Minor wave 3 may total either a Fibonacci 21 or 34 days, depending on how long the corrections within it take. So far it has lasted only 6 days.
Draw a base channel about minor waves 1 and 2. Minor wave 3 should have the power to break through support at the lower edge. Along the way down upwards corrections should find resistance at the upper edge. Copy this channel over to hourly charts. While the lower edge continues to provide support the alternate wave count should be considered as a possibility.
Since the top labelled intermediate wave (2) volume is still strongest on down days.
On Balance Volume continues to agree with the downward trend for price.
I am moving the end of subminuette wave iii lower because here the wave count has better proportions, avoids “squished up” fourth and fifth waves at the end, and has good fibonacci ratios.
Subminuette wave iii is 1.74 short of 4.236 the length of subminuette wave i.
Ratios within subminuette wave iii are: micro wave 3 is 3.15 longer than 2.618 the length of micro wave 1, and micro wave 5 is just 0.85 short of 1.618 the length of micro wave 1. Micro wave 5 subdivides nicely as a five wave impulse with submicro waves (1) and (3) very close to equal in length.
Subminuette wave ii was an expanded flat correction. Within it micro wave B was a 152% correction of micro wave A and micro wave C was just 0.27 short of 1.618 the length of micro wave A.
Given the guideline of alternation subminuette wave iv is most likely to be a zigzag or zigzag multiple. So far it looks like it may be unfolding as a zigzag. It is most likely to be shallow, ending about the 0.382 Fibonacci ratio at 1,176. If it is a zigzag then within it micro wave B may not move beyond the start of micro wave A at 1,155.35.
There were no green candlesticks or doji for subminuette wave ii on the daily chart. Subminuette wave iv is very likely to also not show on the daily chart so I expect another red candlestick for Wednesday’s session. If subminuette wave iv is a zigzag it could be over relatively quickly as zigzags tend to be more brief structures.
Draw a channel using Elliott’s first technique about minuette wave (iii): draw the first trend line from the lows labelled subminuette waves i to iii, then place a parallel copy on the high labelled subminuette wave ii. Subminuette wave iv may find resistance and may end touching the upper edge of this channel. Sometimes fourth waves overshoot these channels, but in this case I expect that is less likely as subminuette wave iv should be shallow so that it exhibits alternation with the deeper subminuette wave ii.
Subminuette wave v may end about the lower edge of this channel.
The channel looks perfect. Micro wave 3 overshoots it, which is very typical.
Subminuette wave iv may not move into subminuette wave i price territory above 1,201.74.
When subminuette wave iv is a completed three wave structure, and looks like a clear three on the hourly chart, then the downwards trend should resume. The next wave down should be subminuette wave v which would complete a five wave impulse for minuette wave (iii). It is also possible that this next wave down, a fifth wave, could possibly be swift and strong, as Gold exhibits swift strong fifth waves typical of commodities reasonably often.
At 1,141 minuette wave (iii) would reach 2.618 the length of minuette wave (i).
When I know exactly where subminuette wave iv has ended I can add to the target calculation for minuette wave (iii) at a second wave degree, and so at that stage the target may widen to a small zone or it may change.
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. Intermediate wave (2) is now deeper than the 0.618 Fibonacci ratio and the structure of minor wave C is close to completion.
For this alternate wave count minor wave C down must subdivide as a five wave structure. The hourly chart would see the subdivisions exactly the same as the main wave count above, so to keep the number of charts at a minimum I will publish only one. For this alternate at 1,159 minor wave C would reach 0.618 the length of minor wave A.
Minor wave C may come to a very slow end, with price hugging the lower blue trend line. An overshoot of the trend line for minor wave C is also possible, but less likely.
Intermediate wave (2) of this new cycle degree trend may not move beyond the start of intermediate wave (1) below 1,131.09.
This analysis is published about 03:42 p.m. EST.