The main Elliott wave count expected downwards movement. This is not what happened. The small channel was breached on the alternate hourly Elliott wave count, which was the first indicator it was more likely.
Summary: The main hourly wave count is discarded in favour of the alternate. A very short term target for Monday is at 1,215. The mid term target is at 1,267 for the middle of a third wave up.
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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) is an incomplete zigzag.
It is also possible that primary wave A will subdivide as a five wave impulse if cycle wave b is a big single zigzag. This idea would relabel intermediate waves (A), (B) and (C) to intermediate waves (1), (2) and (3) within primary wave A trending upwards. The length of this current upwards move labelled intermediate wave (C) on the chart will indicate if this scenario is possible.
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.
When intermediate wave (C) is a complete five wave structure alternate wave counts will be required to manage the various possibilities of cycle wave b continuing.
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). If price keeps rising through this first target, or if when it gets there the structure is incomplete, then I would use the second target. 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.
At 1,303 minor wave 3 would reach 1.618 the length of minor wave 1. Within minor wave 3 minute waves i and ii are complete. Minute wave iii should have begun on Friday.
The base channel is adjusted to a best fit. The lower trend line may provide support. The upper trend line may be breached by a strong third wave up.
Volume for Friday was lower. Although this does not support this wave count, it is not necessary for the start of a third wave to begin with higher volume on its first day.
Friday’s session completes a bullish engulfing candlestick pattern. This is the strongest bullish reversal pattern.
Within minute wave iii there is not yet a complete five wave impulse upwards.
Subminuette wave iii is 1.69 short of 6.854 the length of subminuette wave i.
Ratios within subminuette wave iii are: micro wave 3 is just 0.04 short of 2.618 the length of micro wave 1, and micro wave 5 is just 0.03 short of equality with micro wave 3.
At 1,215 subminuette wave v would reach 0.618 the length of subminuette wave iii.
When minuette wave (i) is complete then minuette wave (ii) should unfold downwards. It may not move beyond the start of minuette wave (i) below 1,193.11.
The mid term target for minute wave iii is at 1,267 where it would reach 1.618 the length of minute wave i. It may be met in a Fibonacci 5 or 8 days.
I have drawn a best fit channel about minuette wave (i). When this channel is clearly breached that should indicate minuette wave (i) as over and minuette wave (ii) downwards as underway.
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 957 primary wave 5 would reach equality in length with primary wave 1. Primary wave 5 may last a total Fibonacci 55 weeks. It has now ended its 39th 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 was the first 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.
Minor wave 2 would now be a completed zigzag. If this alternate is correct it should show itself this week. It now expects a big increase in downwards momentum as a third wave at two degrees begins to gather momentum. An increase in volume as price moves lower would support this wave count. A new low below 1,178.59 would be a strong indication this wave count may be correct.
The green candlestick for Friday’s session (seen on the main wave count) corresponds with lower volume. This does support this alternate wave count. It remains viable.
This alternate wave count remains technically possible. Because the implications are important I will continue to publish it at this stage.
Updated Hourly Wave Count
After some consideration I’m changing the hourly wave count a little. It makes no difference to expected direction and changes the short term target only from 1,215 to 1,214. It makes no difference to when the next deep correction for minuette wave (ii) should arrive.
If minute wave ii ends at the price low this avoids a slightly truncated fifth wave, which looked like a three wave movement on the first hourly chart.
This wave count sees the first wave up from the price low as a five wave impulse. On the five minute chart this movement is ambiguous: may be seen as either a zigzag or an impulse.
Within minute wave ii minuette wave (c) is 0.67 longer than 1.618 the length of minuette wave (i).
Within the new upwards movement subminuette wave iii is just 1.57 longer than 1.618 the length of subminuette wave i. At 1,214 subminuette wave v would reach equality in length with subminuette wave i. If price keeps rising through this first target the fifth wave may be extending. The next target would be at 1,222 where it would reach equality in length with subminuette wave iii.
Minuette wave (ii) may find support at the lower edge of the dark blue channel copied over from the daily chart (this is unchanged from first analysis).
The invalidation point is slightly lower: minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,192.71.
This analysis is published about 11:53 p.m. EST.
Analysis updated at 02:19 a.m. EST on 12 April, 2015.