Three of four Elliott wave counts had a short term target at 1,184.81. Price moved lower to reach 1,184.45 then turned up as expected. All four Elliott wave counts remain valid. I am changing wave count 2 substantially.
Summary: Gold remains in a sideways consolidation phase which began on March 27th. Since price entered the consolidation phase volume continues to decline, and it is strongest on down days. This indicates that when the breakout comes it may be more likely to be down than up. However, the Elliott wave picture remains unclear.
Wave count 1 expects overlapping movement for four more days.
Wave count 2 expects downwards movement to below 1,178.59.
Wave count 3 expects upwards movement from here to 1,232.
Wave count 4 expects a third wave down to 1,144.
A new high comfortably above 1,209.30 would invalidate wave count 1.
A new high above 1,224.35 would invalidate wave counts 1 and 4, leaving wave counts 2 and 3 valid.
A new low below 1,184.45 would invalidate wave count 3.
A new low below 1,184.04 would invalidate wave count 1.
A new low below 1,142.82 would invalidate wave count 2.
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 17 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) must now be complete.
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 four more days so that minute wave y totals a Fibonacci 21. The breakout would be expected to be upwards.
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 1,209.30 today.
This first wave count sees movement since 7th April as a regular contracting or regular barrier triangle. Waves (a), (b) and now (c) are complete, and all 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 (d) upwards may be an incomplete double zigzag. I expect it would be incomplete because it needs to move higher so that the (b)-(d) trend line is not overshot by prior upwards movement. I have placed the (b)-(d) trend line at its minimum slope for this triangle to have the right look. Triangles normally adhere very well to their trend lines. Sometimes the triangle trend lines are overshot while the triangle is underway, but they are almost never breached. Most commonly triangle trend lines provide extremely strong support and resistance and clearly delineate the triangle area.
Minuette wave (d) of a contracting triangle may not move beyond the end of minuette wave (b) at 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 for four more days.
Wave Count #2
Wave count 2 has begun to look very wrong over the last two days. I am discarding the idea that minor wave 2 could be over because there is too much choppy sideways movement that breached base channels with declining volume for the middle of a third wave to have begun.
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 an incomplete expanded flat correction (or possibly a rare running flat, but that has an extremely low probability).
Within the expanded flat minute wave b is a 111% correction of minute wave a. For this flat I do not think minute wave c will exhibit a Fibonacci ratio to minute wave a. Minute wave c is not unfolding as an impulse because the waves subdivide as threes and not fives. Minute wave c may be unfolding as an ending contracting diagonal, which is a very common structure.
Minute wave c is extremely likely to move at least slightly below the end of minute wave a at 1,178.59 to avoid a truncation and a rare running flat.
The diagonal should remain contained within its trend lines, and these should provide strong support and resistance.
1. Minute wave b looks like a clear three wave movement now on the daily chart.
2. An ending diagonal nicely explains the choppy overlapping movement of the last 13 days.
Minor wave 2 may not move below the start of minor wave 1 at 1,142.82.
If the bull wave count is correct then wave count 2 has a higher probability.
Ending diagonals require all sub waves to subdivide as zigzags. Minuette waves (i) and (ii) fit nicely as zigzags and look like threes on the hourly and daily charts.
Within a diagonal the third wave must move beyond the end of the first wave. The fourth wave must overlap back into first wave price territory. Thus diagonals are like triangles, but the difference is they have a slope where triangles are horizontal movements. The traditional technical equivalent is a wedge.
Minuette wave (iii) must move below the end of minuette wave (i) at 1,184.04 to meet that core Elliott wave rule for third waves. Minuette wave (iii) must be a zigzag.
So far within minuette wave (iii) the structure is incomplete. Subminuette wave a may be over, and subminuette wave c may be unfolding as an impulse. Within subminuette wave c micro wave 3 should now be beginning. It must move below the end of micro wave 1 at 1,184.45.
At 1,176 subminuette wave c would reach 1.618 the length of subminuette wave a.
When minuette wave (iii) has a complete corrective count (a corrective count is a wave with 3, 7, 11… and any further multiple of 4) then minuette wave (iv) should move upwards back into minuette wave (i) price territory. Minuette wave (iv) may not move beyond the end of minuette wave (ii) above 1,209.30.
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 now a complete running contracting triangle. The final wave of the triangle, minuette wave (e), has overshot the (a)-(c) trend line.
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 would substantially reduce in probability to a very unlikely alternate, but I will retain it until price proves it wrong. I have created a parallel copy of the maroon trend line and pushed it up to sit on the high of intermediate wave (2). It is possible that minor wave 2 could find resistance at this line.
At 1,232 minute wave c would reach 0.618 the length of minute wave a. This target expects an overshoot of the maroon trend line. 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 20 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 now complete.
Minute wave c up must subdivide as a five wave structure, most likely an impulse. Within it no second wave correction may move beyond the start of its first wave below 1,184.45. This invalidation point allows for the possibility that my degree of labelling within minute wave c is wrong, that minuette wave (i) within it is incomplete.
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. Up days have lower volume than down days; if the trend is down this is exactly how volume should behave.
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.
Minute wave ii may not move beyond the start of minute wave i. This invalidation point on the daily chart allows for the possibility that minute wave ii may continue sideways and higher as a flat correction. However, because that would now need a breach of the blue base channel this possibility is highly unlikely.
If wave count 4 is correct then it should show itself in the next 24 hours. The middle of a third wave down should show a strong increase in downwards momentum. At 1,144 subminuette wave iii would reach 2.618 the length of subminuette wave i.
If subminuette wave ii is not over and moves higher as a flat or rare triple zigzag then it may not move beyond the start of subminuette wave i above 1,205.02.
If subminuette wave ii does continue it is very likely to again find resistance at the upper edge of the blue base channel. Keep copying this channel over to hourly charts.
This analysis is published about 04:36 p.m. EST.