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Downwards movement invalidated the hourly Elliott wave count and was unexpected.

Summary: The situation is unclear for the bigger picture. For the short term, I have a bull and a bear wave count which both expect more downwards movement. The target for the bull wave count is 1,157 to complete an expanded flat correction for minor wave 2. The target for the bear wave count is 1,059 for minor wave 3 down. The bear wave count requires a new low below 1,131.09 for full confidence. The bull wave count will require a new high above 1,224.35 (after minor wave 2 is completed) for confirmation. The depth, momentum and volume of this downwards wave may indicate which wave count is correct, bull or bear.

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Bullish Wave Count

I must judge this bullish wave count to have an about even probability with the bear wave count at this stage. Both have problems and both have points in their favour.

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.

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 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.

Yesterday, I had labelled minor wave 2 as over at the low now labelled minute wave a, and downwards movement from 1,224.35 as minute wave ii. That no longer looks right: minute wave ii would be longer in duration than minor wave 2 one degree higher, and would also breach the base channel about minor waves 1 and 2. What has a better overall look is seeing minor wave 2 as an incomplete expanded flat correction. The problems of proportion and breach of the base channel are resolved, and expanded flats are very common structures.

Within minor wave 2 expanded flat minute wave b is a 111% correction of minute wave a. At 1,157 minute wave c would reach 1.618 the length of minute wave a.

Volume for Tuesday spikes higher for a down day. This volume increase is still not larger than prior up days within minor wave 1, and so it indicates that the short / mid term trend is down, but the larger trend may still be up. For volume to indicate the bear wave count it needs to have a down day which has greater volume than the prior up day of 18th March within minor wave 1.

The bullish engulfing candlestick pattern within minute wave c did not indicate a bullish trend change. This may be because it did not come after a big enough downwards movement.

Minute wave c must subdivide as a five wave structure. Within it so far minuette waves (i) and (ii) are complete. At 1,160 minuette wave (iii) would reach 1.618 the length of minuette wave (i). This target expects a short fifth wave down to complete minute wave c as a five wave impulse.

The green channel is a base channel drawn about minuette waves (i) and (ii). It is likely that corrections shall find resistance at the upper edge, and the third wave down may have the power to break through support at the lower edge.

Within minuette wave (iii) when subminuette wave i is complete then a second wave correction upwards should unfold. It is unlikely to show on the daily chart as a green candlestick, so it should be over within a few hours. It is likely to find resistance at the upper edge of the green channel. Subminuette wave ii may not move beyond the start of subminuette wave i above 1,210.88.

Bear 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 is the biggest problem with this wave count.

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 bull 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 is the second big problem with this wave count.

For this bear wave count within intermediate wave (3) minor waves 1 and 2 must be over. To see minor wave 2 continue it would become too large, too long in duration, and it would again breach the maroon channel from the weekly chart. For these reasons I will now move the invalidation point lower for this bear wave count. Within minor wave 3 no second wave correction may move beyond its start above 1,224.35.

At 1,059 minor wave 3 would reach equality in length with minor wave 1. Both the first and third waves would be extended so the final fifth wave should be short and may not also extend.

A new low below 1,131.09 would provide full and final that intermediate wave (3) down is underway. Prior to that a new low below 1,142.82 would substantially increase the probability of this bear wave count.

The increase in volume for Tuesday’s session supports this wave count. If we see a further increase in volume for a down day, stronger than the volume for the up day of 19th March, that would further support this bear wave count.

The subdivisions on the hourly chart are seen in exactly the same way for bull and bear wave counts. Both wave counts expect a five wave impulse is unfolding downwards. The short term target is the same. At 1,160 minute wave iii would reach 1.618 the length of minute wave i.

Within minute wave iii minuette wave (i) is incomplete. Subminuette wave v may end at the lower edge of the orange channel drawn about minuette wave (i). At 1,174 subminuette wave v would reach equality in length with subminuette wave i.

When minuette wave (i) is complete this wave count expects a second wave correction for minuette wave (ii). For this bear wave count minuette wave (ii) may show on the daily chart as one or more green candlesticks or doji. Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,210.88.

This analysis is published about 05:18 p.m. EST.