Downwards movement was expected for wave counts 1, 3 and 4. With price still just above 1,184.04, all Elliott wave counts remain valid and all will be again presented.
Summary: Gold remains in a sideways consolidation phase which began on March 27th. Since price entered the consolidation phase the strongest volume is still on down days, indicating that when the breakout comes it may be more likely to be down than up. Volume continues to decline, which often happens towards the end of a consolidation phase. However, the Elliott wave picture remains unclear.
A new high above 1,209.30 would invalidate wave count 1 at this stage.
A new low below 1,184.04 would invalidate wave counts 1, 2 and 3 at this stage. That would leave only wave count 4 as valid.
A new high above 1,224.35 would invalidate wave counts 1 and 4, leaving wave counts 2 and 3 valid.
I will be looking for an alternate bullish wave count today which sees minor wave 2 continuing lower. The final invalidation point for any alternate for the bull wave count must be at 1,142.82. Only a new low below this point would provide substantial confidence in the bear targets of 1,059 and 957.
Click on charts to enlarge.
To see weekly charts for bull and bear wave counts go here. Wave counts 1 and 2 follow the weekly bull count, wave counts 3 and 4 follow the weekly bear count.
Wave Count #1
So far within cycle wave b there is a 5-3 and an incomplete 5 up. This may be intermediate waves (A)-(B)-(C) for a zigzag for primary wave A, or may also be intermediate waves (1)-(2)-(3) for an impulse for primary wave A. Within cycle wave b primary wave A may be either a three or a five wave structure.
Intermediate wave (A) subdivides only as a five. I cannot see a solution where this movement subdivides as a three and meets all Elliott wave rules. This means that intermediate wave (B) may not move beyond the start of intermediate wave (A) below 1,131.09. Intermediate wave (B) is a complete zigzag. Because intermediate wave (A) was a leading diagonal it is likely that intermediate wave (C) will subdivide as an impulse to exhibit structural alternation. If this intermediate wave up is intermediate wave (3) it may only subdivide as an impulse.
At 1,320 intermediate wave (C) would reach equality in length with intermediate wave (A), and would probably end at the upper edge of the maroon channel. At 1,429 intermediate wave (C) or (3) would reach 1.618 the length of intermediate wave (A) or (1). If this target is met it would most likely be by a third wave and primary wave A would most likely be subdividing as a five wave impulse.
Within intermediate wave (C) minor wave 2 is seen as a double combination: zigzag – X – triangle. The triangle for minute wave y would be about only halfway through.
1. Combinations are reasonably common structures.
2. On the daily chart MACD is hovering at zero. This sideways chop of the last 12 days does look like a possible triangle.
3. The upwards wave labelled minute wave x does look like a three on the daily chart.
Within the triangle of minute wave y minuette wave (c) may not move beyond the end of minuette wave (a) below 1,184.04.
If minute wave y is a contracting triangle then minuette wave (d) may not move beyond the end of minuette wave (b) above 1,209.30.
If minute wave y is a barrier triangle then minuette wave (d) should end about the same level as minuette wave (b) at 1,209.30, as long as the (b)-(d) trend line is essentially flat. In practice this means that minuette wave (d) may end slightly above 1,209.30. This is the only Elliott wave rule which is not black and white.
For this wave count 1 I would expect sideways choppy movement for much of this week. The breakout would be expected to be upwards.
If price moves below 1,184.04, then for the bull wave count, I am trying to see an alternate possibility which allows for minor wave 2 to be continuing lower. At this stage the only possibility I can see would relabel intermediate wave (C) as an ending diagonal with minor wave 1 a zigzag and downward movement a zigzag for minor wave 2. This has an extremely low probability because intermediate wave (A) was a leading diagonal, and is highly unusual for both A and C waves of a zigzag to both be diagonals.
If minor wave 1 ends as labelled here, as an impulse, then minor wave 2 (if it is continuing) may only be a flat or combination. A flat correction would see a five wave structure down for minute wave c unfolding, and there is still too much choppy overlapping movement for this to look right (which is why I discarded it a few days ago).
The invalidation point, if there is any continuation of minor wave 2 as a different structure to that labelled on this daily chart, would be the start of minor wave 1 at 1,142.82. Only a new low below 1,142.82 would finally invalidate alternate ideas for this bull wave count.
Volume continues to decline indicating Gold is still in a consolidation phase which is nearing maturity. If the breakout is upwards is should come with a substantial increase in volume for an up day when it happens.
The hourly charts today will all show movement since the high at 1,209.22.
This first wave count sees movement since 7th April as a regular contracting or regular barrier triangle. Only waves (a) and (b) are complete, and both subdivide best as single zigzags. This means that one of the remaining sub waves should subdivide into a more complicated and time consuming double, or possibly a triangle to complete a nine wave triangle.
Minuette wave (c) is an almost complete zigzag. Within it subminuette wave c should be a five wave structure, and the final fifth wave of micro wave 5 is almost complete. At 1,184.81 micro wave 5 would reach equality in length with micro wave 1.
Minuette wave (c) of a contracting or barrier triangle may not move beyond the end of minuette wave (a) below 1,184.04. This invalidation point will remain black and white while the triangle is completing.
When minuette wave (c) is complete then minuette wave (d) upwards of a contracting triangle may not move beyond the end of minuette wave (b) above 1,209.30.
Minuette wave (d) upwards of a barrier triangle should end about the same level as minuette wave (b) so that the (b)-(d) trend line is essentially flat. In practice this means that minuette wave (d) may end slightly above 1,209.30 and so this invalidation point is not black and white.
The final wave of the triangle for minuette wave (e) would be most likely to undershoot the (a)-(c) trend line, and less likely to overshoot the (a)-(c) trend line.
Wave count 1 expects the most sideways movement, and the breakout for this idea may not come until next week.
Wave Count #2
This wave count is identical to wave count #1 up to the high labelled minor wave 1. Thereafter, instead of minor wave 2 continuing it sees minor wave 2 as complete, within minor wave 3 minute waves i and ii complete, and now within minute wave iii minuette waves (i) and (ii) are also complete.
1. Minute wave ii looks like a clear three wave movement now on the daily chart.
2. Minor wave 3 should show its corrections for minute waves ii and iv clearly on the daily chart.
1. Minute wave ii clearly and strongly breaches the lower edge of a base channel drawn about minor waves 1 and 2, one degree higher.
2. Minute wave ii is twice the duration of minor wave 2 one degree higher.
3. The upwards wave of minute wave i looks like a three on the daily chart, but it should be a five.
4. Minuette wave (ii) has now moved further sideways / lower for this wave count, and overshoots a base channel drawn about minute waves i and ii, as well as the higher degree channel about minor waves 1 and 2. It is four days in duration, longer than minor wave 2 two degrees higher. This looks very wrong now.
Minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,184.04.
For wave count 2 I had left the invalidation point at 1,184.04 to allow for the possibility that minuette wave (ii) could continue. For wave count 2 this is what may have happened.
However, structure does not support this wave count. Minuette wave (ii) subdivides now as a double combination, but the second structure in the double deepens the correction giving the correction a downwards slope, not sideways. This is contrary to the purpose of combinations which is to take up time and move price sideways, so they normally have a sideways trend.
The combination subdivides as a flat – X – zigzag. In the very short term if there is a new low below 1,185.83 this wave count will further reduce in probability because at that stage subminuette wave y would be a clear five wave impulse and not a three wave zigzag. Subminuette wave y must be a three for this wave count to make sense.
At 1,304 minute wave iii would reach 2.618 the length of minute wave i.
Wave Count #3
This wave count follows the bear weekly count which sees primary wave 5 within cycle wave a as incomplete. At 957 primary wave 5 would reach equality in length with primary wave 1.
This wave count sees minor wave 2 as an incomplete zigzag, and within it minute wave b a close to complete running contracting triangle. The final wave of the triangle, minuette wave (e), is overshooting the (a)-(c) trend line.
When the triangle is complete then the zigzag for minor wave 2 should end with a small wave up for minute wave c. It should find strong resistance at the upper edge of the maroon channel copied over here from the weekly chart. If this maroon trend line is breached again by a full daily candlestick above it and not touching the maroon trend line then this bear wave count should be discarded.
At this stage the triangle is almost complete. At 1,234 minute wave c would reach 0.618 the length of minute wave a. This target expects an overshoot of the maroon trend line, which would still be acceptable, as long as it is not properly breached. If the target is wrong it would be too high. Minute wave c is extremely likely to make at least a slight new high above minute wave a at 1,219.99 to avoid a truncation.
1. The upwards waves of minuette waves (b) and (d) do look like threes on the daily chart. A triangle nicely explains the sideways chop of the last 19 days.
2. MACD supports the idea of a triangle unfolding as it is hovering at the zero line on the daily chart.
3. Volume supports the idea of a triangle (a typical consolidation phase normally sees declining volume towards its end).
1. Minor wave 2 would be much longer in duration than a minor degree second wave normally is for gold.
Minor wave 2 may not move beyond the start of minor wave 1 above 1,308.10.
The final wave of the triangle is almost complete. Minuette wave (e) may be a zigzag, and within it subminuette wave c must be a five wave structure. Subminuette wave c is an almost complete impulse.
Within subminuette wave c micro wave 3 is 1.01 longer than 2.618 the length of micro wave 1. At 1,184.81 exactly micro wave 5 would reach equality in length with micro wave 1.
Minuette wave (e) of this contracting triangle may not move below the end of minuette wave (c) at 1,184.04.
Wave Count #4
This wave count is identical to wave count 3 up to the low labelled minor wave 1. Thereafter, it still sees minor wave 2 as a completed zigzag, and minor wave 3 in its very early stages.
Minute wave ii is seen as a completed double combination.
1. The proportion of minute wave ii looks right.
2. Upwards movement continues to find resistance at the upper edge of the blue base channel drawn about minor waves 1 and 2.
3. It is very common for a third wave to begin with a series of overlapping first and second waves.
4. If Tuesday’s session is a small correction within a downwards trend then it should have lower volume.
1. Minute wave c on the daily chart looks like a three wave structure, but on the hourly chart it does subdivide very nicely as a five. This is only a small detraction.
2. Volume for Wednesday’s session is higher than prior up days, but still not a strong spike. Downwards breakouts do not necessarily have to be associated with volume spikes as the market may fall of its own weight. A volume spike would increase probability of this wave count, but its absence is only a small detraction.
At 1,059 minor wave 3 would reach equality in length with minor wave 1.
The blue base channel is copied over to the hourly chart. Upwards movement continues to find support right at or just below this blue trend line.
Within minor wave 3 there are now two overlapping first and second waves for minute wave i and ii, and minuette waves (i) and (ii).
Within minuette wave (iii) subminuette wave i is an almost complete impulse. The target for this impulse to end is the same at 1,184.81. When it is done then another second wave correction should be expected which may or may not show up on the daily chart. When the impulse is completed then upwards movement should breach the narrow best fit channel drawn on this hourly chart about subminuette wave i. That would be earliest indication subminuette wave ii has begun.
When subminuette wave ii begins draw a Fiboancci retracement along the length of subminuette wave i. Use the 0.382 and 0.618 Fibonacci ratios as targets for subminuette wave ii to end. Subminuette wave ii may not move beyond the start of subminuette wave i above 1,205.02. If it gets that high (which is very unlikely) it should again find very strong resistance at the upper blue trend line copied over here from the daily chart.
This analysis is published about 03:49 p.m. EST.