Upwards movement continued which fits the bullish alternate Elliott wave count. A new high above 1,210.88 indicated a third wave up may be underway.
Summary: Gold is still within the sideways consolidation range it has been in since 27th March. The situation is still unclear and extreme caution is still advised. At this stage a new high above 1,224.35 would not confirm an upwards breakout, but if this point is breached with strong volume an upwards breakout would be indicated. A new low now below 1,175.28 would indicate a downwards breakout which does not necessarily require high volume but that would increase the probability of a bear wave count. At this stage I will favour neither the bull nor bear wave count.
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To see weekly charts for bull and bear wave counts go here.
Bull Wave Count
The bull wave count sees primary wave 5 and so cycle wave a a complete five wave impulse on the weekly chart. At the weekly chart level this has a good look.
The problem with the bull wave count is within the subdivisions of intermediate wave (5). I have not found a solution which avoids running flats and has good proportion between the second and fourth waves of the impulse. The bear wave count has a better fit for this movement.
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.
It is possible that the intermediate degree movement up for the bull wave count is beginning with a leading diagonal in the first wave position for minor wave 1.
A leading diagonal must have second and fourth waves which subdivide as zigzags. The first, third and fifth waves are most commonly zigzags but sometimes they are also impulses.
Here, within minor wave 1, minute wave i may be a zigzag, and now minute wave ii also may be a completed zigzag.
Within minute wave ii minuette wave (a) subdivides as a five wave structure, minuette wave (b) subdivides as a double combination (flat – x – zigzag), and minuette wave (c) subdivides as an ending diagonal.
This alternate wave count sees very time consuming first and second waves at minuette degree, but sometimes within diagonals the waves may be longer in duration. The diagonal is most likely to be contracting so minute wave iii is most likely to be shorter than minute wave i and end before 1,257.
Diagonals don’t normally exhibit Fibonacci ratios between their actionary waves, so a target for minute wave iii cannot be calculated until some structure within it can be used. Minute wave iii must move above the end of minute wave i at 1,224.35.
Minute wave iii of a leading diagonal may be either a zigzag or an impulse.
So far neither structure would be complete so more upwards movement is required for this wave count.
At 1,232 minuette wave (iii) would reach equality in length with minuette wave (i). When the next five up is complete I will have an hourly alternate wave count for the bull wave count which looks at the possibility that minute wave iii is a zigzag, and this depends on where the next five up ends. It it takes minute wave iii above the end of minute wave i at 1,224.35 it may be the end of minute wave iii as a zigzag within a contracting leading diagonal.
Within minuette wave (iii) or (c) is complete then how low the next wave down goes will determine if minute wave iii is over as a zigzag or will continue as an impulse.
This bull wave count expects a continuation of overall choppy overlapping movement generally trending upwards. The traditional technical equivalent of this diagonal would be a rising wedge.
Micro wave 2 may not move beyond the start of micro wave 1 below 1,199.56.
Main Bear Wave Count
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.
Within primary wave 5 intermediate wave (1) subdivides perfectly as an impulse, and intermediate wave (2) subdivides perfectly as an expanded flat correction. Intermediate wave (3) should have begun.
The problem with the bear wave count is twofold. The channel about cycle wave a (upper maroon trend line, copied over from the weekly chart) is clearly breached. If cycle wave a is incomplete this trend line should not be breached.
The second problem is the duration and size of intermediate wave (2). Although all the subdivisions are perfect it looks too big at the weekly chart level.
Because the base channel on the alternate bear wave count is now clearly breached it has been relegated to an unlikely alternate. This main bear wave count has about an even probability with the bull wave count at this stage.
Minor wave 2 may be continuing as a double zigzag. The only problem with this part of the wave count is the duration of minor wave 2. Now both minor wave 2 and intermediate wave (2) look too big on the weekly chart.
The purpose of a second zigzag is to deepen a correction when the first zigzag does not move price deep enough. Within double zigzags the X wave is normally shallow. The second zigzag may end when price touches the parallel copy of the upper edge of the maroon channel, in line with resistance at the high of intermediate wave (2).
Minor wave 2 may not move beyond the start of minor wave 1 above 1,308.10. Before price reached that point this wave count would substantially reduce in probability.
Minute wave y must subdivide as a zigzag. At 1,251 minuette wave (c) within it would reach 1.618 the length of minuette wave (a).
Minuette wave (c) must be a five wave structure. When subminuette wave i is complete then subminuette wave ii may not move beyond the start of subminuette wave i below 1,199.33.
Alternate Bear Wave Count
This wave count sees minor wave 2 as a completed zigzag, and minor wave 3 in its very early stages.
Minute wave ii is seen as an incomplete expanded flat correction.
The base channel about minor wave 2 is breached reducing the probability of this wave count. This alternate bear wave count has a lower probability than the main bear wave count.
The middle of the third wave has not yet passed. This wave count still expects to see a strong increase in downwards momentum at the daily chart level, beyond that seen for minor wave 1.
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.
Minuette wave c must complete as a five wave structure. So far the structure would be incomplete.
Not much more upward movement is required; the completion of subminuette wave (iii) followed by sideways movement for subminuette wave (iv), and a short fifth wave for subminuette wave (v).
Within subminuette wave (iii) no second wave correction may move beyond its start below 1,199.33.
There is more than one way to label this upwards movement. Minuette wave (c) may be closer to completion.
Subminuette wave iv may not move into subminuette wave i price territory below 1,207.34. If we see a drift sideways followed by a short upwards wave which does not move above 1,224.35 then it is possible upwards movement may be over.
Once minuette wave (c) looks like a completed five wave structure minute wave ii could be over. This wave count would then expect a downwards breakout to begin for a third wave down.
This analysis is published about 04:57 p.m. EST.