Upwards movement was unexpected. The second wave correction is continuing higher.
Summary: The target for upwards movement to end is at 1,191 – 1,193. The next daily candlestick must return price below the upper edge of the blue base channel. If a full daily candlestick closes above and does not touch the blue trend line I will swap the main and alternate wave counts over. I have a new alternate wave count for you today.
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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 has just ended its 36th 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 18 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 point here.
A new low below 1,131.09 would confirm that intermediate wave (3) down is underway.
Within minor wave 3 minute wave ii may not move beyond the start of minute wave i above 1,223.33.
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 it is more shallow than normal due to the strong downwards pull of intermediate wave (3).
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 14 days. At this stage I will not provide a target for minor 3 to end, and it may not exhibit a Fibonacci ratio to minor wave 1. When minute waves i through to iv within it are complete I will again calculate and provide a target for minor wave 3 to end. For now the focus will be on minute wave iii.
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. At this point in time the upper edge of this blue base channel is critical. If upwards movement continues over the next one or two days and breaches this trend line the main wave count will be in doubt. If the upper blue trend line is breached by one full daily candlestick above it and not touching it then I will swap the daily wave counts over and the alternate would be preferred.
For Gold base channels almost always show clearly where price finds support / resistance during corrections. But again, almost always is not the same as always. Sometimes the base channel is overshot, sometimes it is breached. A breach is unusual though so if this channel is breached the probability of this wave count reduces significantly.
Since the top labelled intermediate wave (2) volume is still strongest on down days.
On Balance Volume shows no divergence with price at the end of minute wave i. This supports the main wave count because if the alternate is correct and we have just seen a major low then OBV would be more likely to show some divergence. For this main wave count the trend remains down.
Minute wave ii may be continuing as a double zigzag. Because this double zigzag takes price above the base channel it was the least likely structure for minute wave ii. It also would probably end about the 0.618 Fibonacci ratio of minute wave i about 1,193. This would see minute wave ii a relatively deep correction, which is less common for a second wave within a third wave one and two degrees higher.
At 1,191 subminuette wave c within the second zigzag would reach 1.618 the length of subminuette wave a.
This target should be met early during Monday’s session. Monday must see price move back below the dark blue trend line on the daily chart so that the base channel is not breached by a full daily candlestick.
At this stage the main and alternate wave counts are at the cusp of diverging. This main wave count needs to see a third wave down begin before I will have any confidence in it. Initially a breach of the green upwards sloping channel on this hourly chart would provide some confidence in this main wave count.
Minute wave ii may not move beyond the start of minute wave i above 1,223.33.
Alternate Daily Wave Count
At this stage I judge this alternate wave count to have a lower probability. This is the point where this alternate wave count now diverges from the main wave count.
A new high above 1,223.33 would invalidate the main wave count and confirm this alternate. Before that price point is passed a clear breach of the blue channel about intermediate wave (2) with one full daily candlestick above the upper blue trend line and not touching it would provide trend channel confirmation for this wave count. At that stage it would substantially increase in probability and I would swap the main and alternate wave counts over.
Intermediate wave (3) must move beyond the end of intermediate wave (1) above 1,308.10. A new high above this point would provide full and final confirmation of this alternate wave count.
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 complete and 0.93 the length of intermediate wave (1).
Intermediate wave (2) of this new cycle degree trend may not move beyond the start of intermediate wave (1) below 1,131.09. Any breach of this price point by the smallest amount, even intra minute, would invalidate this wave count.
RSI has dipped below 30 which normally happens at the point of a more major trend change for Gold. However, this is not definitive. Looking back within cycle wave a I see other instances where RSI dips below 30 and does not precede a more substantial trend change: this happened for example at the low dated 19th Dec, 2012, where RSI dipped below 30 slightly only preceding a rise lasting 7 days, and RSI dips below 30 on 11th September, 2014, (just off to the left of the chart) yet price continued sideways and lower to find the low at 6th Oct, 2014.
In this instance there is very slight divergence with RSI and price. The price low of 11th March was followed by a new low on 17th March, yet RSI did not also make a new low. This divergence is only slight though, and if this low is a major low I would expect to see stronger divergence.
RSI is a small warning that this alternate may be correct, but it is not definitive in this case.
Volume for the last three up days has not exceeded highest volume during the prior wave down. If this upwards movement is the start of a much longer trend I would expect to see higher volume.
Second Alternate Daily Wave Count
It has been suggested by a member that only minor wave 1 may be complete. I wanted to see if the idea fits EW rules and has the “right look”.
If minor wave 1 only has recently ended then it was an exceptionally long extension, lasting 38 days. Gold does not exhibit extended first waves commonly; it normally has extended third or fifth waves. That reduces the probability of this wave count slightly.
Within minor wave 1 minute wave ii lasted 15 hours and minute wave iv lasted 199 hours. Minute wave iv is more than 13 times the duration of minute wave ii. This gross disproportion substantially reduces the probability of this wave count and does not lend the “right look” at the daily chart level.
Minor wave 2 should breach the channel about minor wave 1. In this instance minor wave 2 may continue for another two days to total a Fibonacci five, and may end about the 0.382 Fibonacci ratio of minor wave 1 at 1,203. Minor wave 2 may last longer and move higher, to end about the 0.618 Fibonacci ratio at 1,242, but this would be less likely for a second wave within a third wave one degree higher.
If the blue trend line is breached on the daily chart I will use this wave count as an alternate.
This analysis is published about 06:35 p.m. EST.