A slight new low below 1,198.39 invalidated the main hourly Elliott wave count and confirmed the alternate hourly Elliott wave count. At that stage a leading diagonal was complete, and I expected it to be followed by a deep second wave correction to find resistance at the upper blue trend line. This is pretty much what happened.
Summary: A third wave within a third wave down has most likely begun. I will have more confidence in this idea when the green channel on the hourly chart is breached. I will have full confidence in this idea with a new low below 1,189.64. This confirmation may come now within the next 24 hours.
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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 would expect minor wave 3 to most likely last a total Fibonacci 34 sessions. It is just completing its third session.
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.
Since the top labelled intermediate wave (2) volume is still strongest on down days. Volume for 2nd March, a down day, was the highest since 5th February, also a down day.
Today On Balance Volume shows a slight positive reversal, which does not fit with the wave count at the hourly chart level. This gives a slight cause for concern and leaves me to state clearly that some confirmation is required as outlined on the hourly chart below before I have confidence that minor wave 3 has begun. The thing about divergence is it often indicates a reversal is coming, but it should be used as confirmation not as an indicator. I am less experienced in interpreting positive and negative reversals, and I am assuming they are confirmations and not indicators in the same way divergence is.
So far within minor wave 3 down it is unlikely that minute wave i is complete. It is most likely that the first wave within minor wave 3 is still in its early stages.
Within minute wave i minuette wave (i) is a five wave impulse and minuette wave (ii) is a completed zigzag.
Within minuette wave (iii) subminuette wave i does not correctly fit as a leading diagonal as labelled on yesterday’s alternate hourly wave count: the diagonal would be neither contracting nor expanding, the actionary waves would be decreasing in length while the reactionary waves would be increasing in length and the trend lines would diverge.
I expect that subminuette wave i ended earlier and subminuette wave ii was a time consuming flat correction. I have checked the subdivisions within micro wave C on the five minute chart; this movement is ambiguous, it may be either a double zigzag (a “three”) or it may be an ending diagonal (a “five”). Here I am seeing it as a five.
Within subminuette wave ii micro wave C is just 0.27 short of 1.618 the length of micro wave A. Subminuette wave ii has ended very slightly below the 0.618 Fibonacci ratio of subminuette wave i. It is highly likely this correction is over, especially considering the duration.
This wave count now expects an increase in downwards momentum as a third wave of a third wave unfolds down, within minute wave i.
Within subminuette wave iii no second wave correction may move beyond its start above 1,209.53.
This next wave down should have the power to break through support about the lower green trend line. To see how to draw this green channel look at the hourly chart here.
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 02:03 p.m. EST.