The short term target at 1,215 was not met. Price has moved lower, and a second wave correction was expected to find support at the lower edge of the blue channel.
Summary: The main and alternate daily wave counts strongly diverge. The main wave count is more likely and expects strong upwards movement in the next 24 hours to a short term target at 1,243. The alternate daily wave count expects strong downwards movement in the next 24 hours. Volume favours the bullish wave count.
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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 Monday is slightly lower than the prior up day. Since the end of minor wave 2 volume is highest on up days, which supports a bullish wave count.
Friday’s session completes a bullish engulfing candlestick pattern. This is the strongest bullish reversal pattern.
Price did not make a new high on the hourly chart towards the target at 1,215 and so a five up was not completed. This is slightly concerning for this wave count, but fits the alternate daily wave count nicely.
If minute wave iii began at the low labelled minute wave ii then so far within it two first and second waves are complete. This indicates that the middle of the third wave should begin, most likely within the next 24 hours. This wave count expects to see a strong increase in upwards momentum.
At 1,243 subminuette wave iii would reach 2.618 the length of subminuette wave i.
It is slightly concerning that downwards movement is now below the lower edge of the blue channel. Base channels almost always work, but almost always is not the same as always. I have seen several instances where they do not work as expected.
At this stage a new high above 1,210.88 would provide a lot of confidence in this wave count.
I have drawn a base channel about minuette waves (i) and (ii). If subminuette wave ii moves lower it is very likely to find support at the lower edge of that green channel.
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 started its 40th 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.
For this alternate wave count volume since the end of minor wave 2 is so far highest on down days. Friday’s volume for the only up day since that high is not the lowest, but it is lower than two days prior. If the next up day shows higher volume this wave count would further reduce in probability. If the next up day shows lower volume this wave count would be supported.
This alternate wave count remains technically possible. Because the implications are important I will continue to publish it at this stage.
This analysis is published about 05:51 p.m. EST.