A new low below 1,204.53 has confirmed the alternate hourly Elliott wave count. This is now the only hourly Elliott wave count.
Summary: The middle of intermediate wave (3) has most likely begun. A breach of the green channel on the hourly chart would add confidence to the wave count. I will have full confidence that minor wave 3 has begun with a new low below 1,189.64. The target for minor wave 3 to end is at 1,055. Along the way down there should be two corrections for minute waves ii and iv which should show up on the daily chart.
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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.
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).
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 an expanded flat correction. Minor wave C is a complete expanding ending diagonal. Within an ending diagonal all the sub waves must subdivide as zigzags. The fourth wave should overlap first wave price territory. Expanded flats are very common structures and ending diagonals are more common than leading diagonals.
This wave count has more common structures than the alternate wave count, and it has a better fit.
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.
Looking at the duration of minor degree waves within intermediate wave (1): minor wave 1 lasted 18 days, minor wave 2 lasted 5 days, minor wave 3 lasted 31 days, minor wave 4 lasted 8 days, and minor wave 5 lasted 2 days. Corrections do tend to be more brief than an actionary wave of the same degree, so for minor wave 2 within intermediate wave (3) to be over in 9 days looks perfectly normal.
I am redrawing the channel about minor waves 1 and 2 as a base channel. 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.
So far from the end of minor wave 2 there is a five down followed by a three up. This adds a little confidence today to this wave count; if the downwards trend has resumed then we should be seeing movements subdivide as fives down and threes up.
Upwards movement is finding resistance at the upper edge of the corrective channel about minute wave y, the second flat in the double of minor wave 2. Downwards movement is finding support just above the lower edge. I would expect an increase in downwards momentum when downwards movement manages to break through support. When this channel is clearly breached with at least one hourly candlestick below it and not touching it then I would have increased confidence in this wave count.
A new low below 1,189.64 could not be a second wave correction within a continuing C wave up for minor wave 2, and so a new low below 1,189.64 would provide full confidence in this wave count.
Minor wave 3 should show a strong increase in downwards momentum beyond that seen for minor wave 1. If the main daily wave count is correct then minor wave 3 should provide confirmation that the trend at primary and cycle degree remains down for Gold.
At 1,055 minor wave 3 would reach 1.618 the length of minor wave 1.
It is reasonably likely that the first correction of minuette wave (ii) is over. However, if it continues further sideways as a double combination, double zigzag or a flat correction then it may not move beyond the start of minuette wave (i) above 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. It is possible now to see intermediate wave (2) as a deep 0.67 single zigzag. If it is over it may have lasted just a little under half the duration of intermediate wave (1).
My biggest problem with this wave count 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.
Within intermediate wave (5) minor wave 3 looks like a three on the daily chart, where it should be a five. This movement may also be labelled with minor wave 3 ending higher and minor wave 5 looking like a three. Either way, one of the actionary waves within this downwards movement will look like a three and not a five which does not have the “right look” at the daily chart level.
Intermediate wave (2) may be an incomplete zigzag, which subdivides 5-3-5. The subdivisions within intermediate wave (2) for this alternate are exactly the same as for this movement on the main wave count which sees a first, second and now third wave unfolding subdividing 5-3-5.
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.
For this alternate the channel is drawn in the same way, but here it is correctly termed a corrective channel. Minor wave C should find support and end at the lower edge of this channel. The main wave count expects the power of a third wave to break below support at that trend line. How price behaves when it gets to the lower trend line will provide an indication of which wave count is more likely at the daily chart level.
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 03:16 p.m. EST.