Another red candlestick was expected for Thursday’s session. The session is close to ending, and so far the candlestick remains red.
Summary: A small fourth wave correction is either over or may continue slightly higher / sideways. In the very short term a new high above 1,158.22 would indicate the correction is not over; it may end as a flat correction with a target 1,168 – 1,173, or it may continue sideways as a regular contracting triangle. Alternatively, a new low below 1,148.68 would indicate the correction is over and the final fifth wave down is underway to a target at 1,139. The downwards trend is almost complete for the mid term. I expect another red candlestick for Friday, and possibly Monday. Thereafter, I expect another second wave correction upwards to begin which may last either 3 or 5 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) 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.
I am moving the invalidation point for this daily chart down today. Looking at the structure on the weekly chart, if primary wave 5 is incomplete then within it intermediate wave (2) should be over because to see intermediate wave (2) continue further would not have the right look. Within intermediate wave (3) no second wave correction may move beyond its start above 1,308.10.
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 8 days. At 1,055 minor wave 3 would reach 1.618 the length of minor wave 1.
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. While the lower edge is not breached (so far it is only overshot and not clearly breached) 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.
Main Hourly Wave Count
This is the main hourly wave count only because it expects to see better alternation between minuette waves (ii) and (iv).
Minuette wave (ii) was a deep 0.70 zigzag. Within it subminuette wave c is shortest, and only 0.29 longer than 0.618 the length of subminuette wave a. Subminuette wave b within it was an expanded flat correction.
Minuette wave (iv) is least likely to be a zigzag, and more likely to be a flat, combination or triangle, in order to exhibit structural alternation with minuette wave (ii). Minuette wave (iv) is likely to be shallow, ending at either the 0.236 or 0.382 Fibonacci ratios, and within (or close to) the price territory of the fourth wave of one lesser degree above 1,155.35 and below 1,170.63.
So far if minuette wave (iv) is incomplete the first wave up within it is a three. This indicates either a flat or triangle as the most likely structures. The following downwards wave is so far a completed three and is over 90% the length of the prior upwards wave, so the minimum depth for subminuette wave b of a flat correction is met. A triangle is also possible.
If minuette wave (iv) is a flat then it would be a regular flat. Subminuette wave b is 0.94 of subminuette wave a. At 1,168 subminuette wave c would reach equality in length with subminuette wave a, the most typical ratio for a C wave within a regular flat. Subminuette wave c may end when price touches the upper edge of the small upwards sloping orange channel drawn about minuette wave (iv). Regular flats often are nicely contained within their channels.
If minuette wave (iv) is a triangle then it would be a regular contracting triangle (although an expanding triangle is technically possible they are so extremely rare, maybe even the rarest of all Elliott wave structures, so I will not consider this possibility unless it shows itself to be true). A regular contracting triangle would expect choppy overlapping sideways movement in an ever decreasing range. MACD should hover about the zero line, and volume should decline towards the apex of the triangle.
A new high in the very short term above 1,158.22 would invalidate the hourly alternate wave count below and provide confident in this main hourly wave count.
Minuette wave (iii) is 5.68 short of 2.618 the length of minuette wave (i) (this variation is less than 10% the length of the third wave, so I consider it to be acceptable). The final fifth wave down for minuette wave (v) is very likely to be equal in length with minuette wave (i) at 27.88.
Minuette wave (iv) may not move into minuette wave (i) price territory above 1,195.45.
Redraw the channel now that minuette wave (iii) has ended. Draw the first trend line from the lows of minuette waves (i) to (iii), then place a parallel copy on the high of minuette wave (ii). So far minuette wave (iv) is finding resistance at the upper edge of the channel, but fourth waves are not always contained within these channels. This is why Elliott had a second technique to use when fourth waves breach the channel. If this main wave count is correct, when the fourth wave is over redraw the channel using his second technique: draw the first trend line from the ends of minuette waves (ii) to (iv), then place a parallel copy on the end of minuette wave (iii). Minuette wave (v) may find support and may end at the lower edge of the channel.
At this stage because minuette wave (iii) is a long extended wave it is more likely that minuette wave (v) will be shorter and equal in length with minuette wave (i). However, remain aware that the less likely possibility of a strong extended fifth wave remains. If the lower edge of the redrawn channel is breached by downwards movement and momentum is increasing then consider an extended fifth wave which may be very strong, typical of commodities. In that case it may be equal in length with minuette wave (iii) at 67.31.
A new low below the end of subminuette wave b at 1,148.68 in the very short term would make subminuette wave b look like a five wave structure on the hourly chart. It may only be a three wave structure. At that stage the alternate hourly wave count below would be preferred, and would have a higher probability.
If this main hourly wave count is correct then minute wave i may be over within 24 to 48 hours.
Alternate Hourly Wave Count
Alternatively, it is possible that minuette wave (iv) is over. This has a lower probability only because both minuette waves (ii) and (iv) would be zigzags.
Minuette wave (ii) was a deep 0.70 correction and minuette wave (iv) may have been more shallow at 0.28. Minuette wave (ii) has a long wave for subminuette wave a and a shorter wave for subminuette wave c, and minuette wave (iv) may have had a short wave for subminuette wave a and a long wave for subminuette wave c. Within them their subminuette waves b are quite different. There is some alternation within structure, and good alternation in depth. This is a viable wave count.
Minuette wave (iv) may have ended exactly at the upper edge of the channel drawn about minute wave i using Elliott’s first technique.
At 1,139 minuette wave (v) would reach equality in length with minuette wave (i). It may find support and end at the lower edge of the channel.
A new low below 1,148.68 would provide confidence in this wave count. At that stage the downwards wave from the end of minuette wave (iv) would look like a five on the hourly chart.
In the very short term subminuette wave iv may not move into subminuette wave i price territory above 1,158.22.
If this wave count is correct then minute wave i will very likely be over within the next 24 hours. The following correction for minute wave ii should show up on the daily chart, may last about 3 or 5 days, and may be a relatively shallow correction because it is a second wave within a third wave one and two degrees higher. The invalidation point for it is at 1,223.33.
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 for the main wave count. For this alternate minor wave C may not exhibit a Fiboancci ratio to minor wave A.
Minor wave C is overshooting the lower trend line. Sometimes C waves do this. It is close to an end. When minute wave i for the main wave count can be seen as a completed five wave structure then this alternate would see minor wave C as complete. The price point which differentiates the two daily wave counts at that stage will be 1,223.33. This alternate will require movement above 1,223.33 and the main wave count would be invalidated with movement above 1,223.33.
Intermediate wave (3) must move beyond the end of intermediate wave (1) at 1,308.10.
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 05:06 p.m. EST.