Downwards movement for the short term was expected to 1,177. Price moved lower to reach 1,178.59.
Summary: The short term outlook is unclear. Only a new high above 1,219.99 would confirm minor wave 2 as over and minor wave 3 as underway. If minor wave 2 continues further it may end in two or five more days time. It is possible minor wave 2 is over already and lasted just three days, but this is unconfirmed and careful attention to momentum, volume and structure is needed to see if this is the case.
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Main Daily Wave Count
There are more than thirteen possible corrective structures that cycle wave b may take. At this stage it is unclear what degree to label this big movement. Primary wave A (or W) may be an incomplete zigzag.
Cycle wave b may be a flat correction where primary wave A is a zigzag. Cycle wave b may be a triangle where primary wave A is a zigzag. Cycle wave b may be a combination where primary wave W is a zigzag. Cycle wave b may be a double zigzag with the first in the double, primary wave W, incomplete.
When the big zigzag now labelled primary wave A is complete it is also possible that cycle wave b could be over there with the degree of labelling within it moved up one degree.
A new high above 1,308.10 would invalidate the alternate and confirm this main wave count at primary and cycle degree.
The upwards wave labelled intermediate wave (A) fits only as a five wave structure, a leading expanding diagonal. Within a leading diagonal the first, third and fifth waves are most commonly zigzags, and the fourth wave should overlap first wave price territory.
Because intermediate wave (A) subdivides as a five, intermediate wave (B) may not move beyond its start below 1,131.09.
At 1,320 intermediate wave (C) would reach equality in length with intermediate wave (A). This would complete a 5-3-5 zigzag trending upwards. At that stage alternate wave counts would be required to manage the various possibilities for cycle wave b.
At 1,429 intermediate wave (C) would reach 1.618 the length of intermediate wave (A).
Because intermediate wave (A) is a diagonal then it is highly likely intermediate wave (C) will be an impulse in order to exhibit alternation. Intermediate wave (C) may end about the upper edge of the channel drawn about primary wave A.
This wave count sill has problems of structure within primary wave 5 of cycle wave a:
– within primary wave 5 intermediate wave (2) is a running flat with its C wave looking like a three and not a five.
– within intermediate wave (5) the count is seven which is corrective; either minor wave 3 or 5 will look like a three wave structure on the daily chart where they should be fives.
It is for these reasons that I will retain the alternate until price confirms finally which wave count is correct and which is invalidated.
Lower volume for the last three days fits this main wave count. If price has entered a correction and not a new trend at a larger degree then it should be expected that during the correction volume declines. Minor wave 2 so far has lasted three days. It may be over there (second hourly wave count) or it may yet continue. If it continues it may end in another two days to total a Fibonacci five, or maybe even five days to total a Fibonacci eight.
I have three hourly wave counts for you today. I present them in no particular order; they are all three equally as likely. Price, structure, momentum and volume will tell which one is correct over the next couple of days.
Main Wave Count – First Hourly
All three wave counts see downwards movement from the high labelled minor wave 1 to the low during Tuesday of 1,178.59 as a 5-3-5 structure. All three wave counts see the subdivisions within this movement in exactly the same way.
Minor wave 2 is very likely to end about the 0.618 Fibonacci ratio at 1,172. It is most likely to subdivide as a zigzag.
This first hourly wave count sees minute wave a an incomplete impulse, with only minuette waves (i), (ii) and (iii) now complete. Minuette wave (iii) is 1.34 short of 1.618 the length of minuette wave (i).
Minuette wave (iv) would be an incomplete zigzag. This would provide alternation with the flat correction of minuette wave (ii). Minuette wave (iv) has broken out of the channel drawn using Elliott’s technique about minute wave a impulse. That is okay, sometimes fourth waves do that, which is why Elliott had a second technique to use when they do. When minuette wave (iv) is complete redraw the channel using the second technique: draw the first trend line from the ends of minuette waves (ii) to (iv) then a parallel copy on the end of minuette wave (iii). That channel should show where minuette wave (v) comes to an end.
Minuette wave (iv) may not move into minuette wave (i) price territory above 1,202.03. At 1,194 subminuette wave c would reach equality in length with submineutte wave a.
Minuette wave (v) would reach equality in length with minuette wave (i) if it is close to 18 in length.
When minute wave a is complete then minute wave b should unfold upwards and / or sideways. Minute wave b may be one of more than thirteen corrective structures and for this wave count it should show up on the daily chart as a at least one green candlestick or doji. Minute wave b may not move beyond the start of minute wave a above 1,219.99.
This first hourly wave count may see minor wave 2 end about the 0.618 Fibonacci ratio at 1,172 in another two or maybe even five days, depending on how long minute wave b lasts.
Main Wave Count – Second Hourly
Because there is now a complete 5-3-5 structure trending downwards minor wave 2 may be over there as a single zigzag. It would have lasted a Fibonacci three days and would have ended a little short of the 0.618 Fibonacci ratio at 1,172.
If minor wave 3 has begun then within it no second wave correction may move below the start of its first wave below 1,178.59.
I would have some confidence in this wave count if we see a new high above 1,202.03. But at that stage the third hourly wave count below would also remain valid.
The following three things would also add confidence to this wave count:
1. A clear five up on the hourly chart.
2. An increase in volume on the daily chart for the next daily candlestick.
3. An increase in momentum on the hourly chart (although this may not build for another couple of days).
A new high above 1,219.99 would provide full and final confirmation of this wave count.
At 1,303 minor wave 3 would reach 1.618 the length of minor wave 1. Minor wave 3 may only subdivide as an impulse, and it should show an increase in momentum beyond that seen for minor wave 1.
Main Wave Count – Third Hourly
With a 5-3-5 downwards zigzag now complete, it is also possible that minor wave 2 is an incomplete double zigzag.
Double zigzags are relatively common structures. The second zigzag in the double exists to deepen the correction when the first does not move price deep enough. Here the first zigzag labelled minute wave w has not managed to take price down to the 0.618 Fibonacci ratio, and so a second smaller zigzag may be necessary to deepen the correction.
Within a double zigzag, to achieve the purpose of deepening the correction, the X wave is often relatively shallow. Unlike a double combination (which is a sideways movement) double zigzags normally have X waves which do not make a new price extreme beyond the start of the first zigzag of wave W.
Minute wave x may not move beyond the start of minute wave w above 1,219.99. This is not a rule clearly outlined in Frost and Prechter, but my interpretation of the form outlined there for double zigzags, and my interpretation of how they behave based upon experience.
At 1,194 minuette wave (c) within minute wave x would reach equality in length with minuette wave (a).
Thereafter, this wave count expects to see a second zigzag unfold downwards to end about 1,172.
This wave count may see minor wave 2 end in two more days to total a Fibonacci five.
Alternate Daily Wave Count
This alternate 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. Primary wave 5 may last a total Fibonacci 55 weeks. So far it is now in its 36th week.
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.
This wave count still has a better fit in terms of better Fibonacci ratios, better subdivisions and more common structures within primary wave 5, in comparison to the main wave count above.
Within intermediate wave (3) minor wave 1 is a long extension. Within minor wave 1 minute waves iv and ii are grossly disproportionate, with minute wave iv more than 13 times the duration of minute wave i. This also reduces the probability of this wave count.
Although the invalidation point is at 1,308.10, this alternate wave count should be discarded long before that price point is reached. If the maroon channel is breached again by one full daily candlestick above it and not touching it then I would discard this alternate wave count.
A new low below 1,131.09 would confirm that intermediate wave (3) down is underway.
Lower volume for the last three days now is concerning for this wave count. If minor wave 3 of intermediate wave (3) has just begun volume should increase. Minor wave 2 already has lasted 7 days and is longer than minor degree corrections normally are. Although it is possible that only minute wave a is over and this downwards movement is minute wave b, that would see minor wave 2 far too long in duration. The probability of that idea is very low indeed. So low I hesitate to publish it and I will not give it undue weight by publishing an hourly chart for it at this time.
This wave count now needs to prove itself. It needs to show strong downwards movement with an increase in momentum and an increase in volume. A new high above 1,219.99 would further reduce the probability of this alternate at this stage, I may discard it at that point.
This alternate wave count remains technically possible.
This analysis is published about 05:52 p.m. EST.