Another red candlestick and a decrease in momentum were expected for Monday. So far that is what we have, although the session is not yet over and the candlestick may yet end as green.
Summary: The trend remains down. A third wave is incomplete. In the very short term I expect a correction to end about 1,181. Thereafter, more downwards movement should follow. The mid term target for minor wave 3 remains the same at 1,055.
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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 beginning 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.
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.
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 5 days.
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. I had expected this channel to be breached on Monday. While the lower edge continues to provide support the alternate wave count should be considered as a possibility.
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.
On Balance Volume continues to agree with the downward trend for price. The increased volume bar for Friday also agrees the trend is down.
The duration of sideways movement for Monday strongly suggests subminuette wave iii is over and subminuette wave iv has begun. It is possible that a small series of fourth and brief fifth waves are squashed in at the end of subminuette wave iii on the five minute chart.
Subminuette wave iii has no Fibonacci ratio to subminuette wave i. It is very likely that subminuette wave v will exhibit a Fibonacci ratio to either of subminuette waves iii and i. When subminuette wave iv is complete then a target down for subminuette wave v to complete minuette wave (iii) can be calculated. That may be able to be done tomorrow.
So far within subminuette wave iv micro wave A may be a completed impulse on the five minute chart. This movement is ambiguous, which means subminuette wave iv may be a zigzag and is possible that it could be complete. However, it is more likely that subminuette wave iv is incomplete though, to be better in proportion to subminuette wave ii so the wave count has a more typical look to it at the hourly chart level.
Subminuette wave ii was a relatively deep 0.59 expanded flat correction. Given the guideline of alternation subminuette wave iv may be expected to most likely be a zigzag or zigzag multiple, and to most likely end about the 0.236 or 0.382 Fibonacci ratios. So far if only micro wave A is complete it has reached up to the 0.236 Fiobnacci ratio, so micro wave C may end a little higher at the 0.382 Fibonacci ratio at 1,181.
Subminuette wave iv may not move into subminuette wave i price territory above 1,201.74.
When this fourth wave is complete then a fifth wave down should follow. The trend remains down. Gold sometimes exhibits strong swift fifth waves, typical of commodities. It does not always do this, but it does it often enough for it to be a tendency we need to look out for. If this happens then subminuette wave v may have the power to break below the lower edge of the blue base channel.
At this stage I expect that only minute wave i within minor wave 3 is coming to an end. It is entirely possible that minute wave i will continue to find support at the lower blue trend line this week, and minute wave ii could bounce up from here. Alternatively, it is also possible that the fifth wave within minute wave i will be swift and strong and break below this blue trend line.
If the lower blue trend line is not breached this week that does not mean the alternate wave count below is more likely. The base channel may not be breached until the middle of minor wave 3 begins.
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 one. For this alternate at 1,159 minor wave C would reach 0.618 the length of minor wave A.
Minor wave C may come to a very slow end, with price hugging the lower blue trend line. An overshoot of the trend line for minor wave C is also possible, but less likely.
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 04:08 p.m. EST.