A small down day has not breached any invalidation points. All three Elliott wave counts remain valid.
Summary: In the short term I expect at least a little more downwards movement to 1,200 – 1,197. It is possible that the small down day for Wednesday is the very first day of a strong third wave down. While Gold remains within the consolidation phase it entered on 27th March, and while multiple wave counts remain viable, extreme caution is advised. The breakout will come eventually and price will tell us which wave count is correct. Volume continues to indicate the breakout may more likely be down than up.
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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. That is why 1,131.09 is final confirmation for the bear wave count at the daily and weekly chart level.
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 a 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 may be impulses.
Here, within minor wave 1, minute wave i may be a zigzag, and now minute wave ii also may be a completed zigzag.
This wave count sees very time consuming first and second waves at minute 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 so 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.
After considering several different ways to label most recent movement from the low at 1,175.28, I have concluded that this was a five up followed by an incomplete three down (or for the bear alternate a new five down).
Because minute wave iii may subdivide as either a zigzag or an impulse this five up may be either minuette wave (a) of a zigzag or minuette wave (i) of an impulse.
Ratios within minuette wave (a) or (i) are: there is no Fibonacci ratio between subminuette waves iii and i, and subminuette wave v is 1.05 short of 0.618 the length of subminuette wave iii.
If the current downwards trend is a correction then it would most likely be incomplete. At 1,197 subminuette wave c would reach 1.618 the length of subminuette wave a. This is $3 below 1,200 where minuette wave (b) or (ii) would correct down to the 0.382 Fibonacci ratio.
Minuette wave (b) or (ii) may not move beyond the start of minuette wave (a) or (i) below 1,175.28.
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 a less likely 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.
All three hourly wave counts see the last wave up as a five in exactly the same way. For this main bear wave count this would be minuette wave (a) within minute wave y. Minuette wave (b) is showing up on the daily chart as so far one red candlestick, which it should for minute wave y to have a clear three wave look on the daily chart.
Structures are the same so targets are the same for the short term for this bear wave count and the bull wave count.
Within minute wave y the target must be calculated at minuette wave degree using the ratio between minuette waves (a) and (c). Because minuette wave (b) is incomplete it is not known where minuette wave (c) begins, so a target for it to end cannot yet be calculated.
It is most likely that minuette wave (c) will be 1.618 the length of minuette wave (a) at 64.6 so that minute wave y moves a reasonable distance above minute wave w giving the double zigzag a typical look.
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 a complete 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, but only for the reason of the breach of the channel. Base channels often work as they should, but not always. Sometimes a lower degree second wave does breach a base channel.
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.
If minute wave ii were to continue higher it may not move beyond the start of minute wave i.
For this bear wave count the upwards wave here labelled minuette wave (c) is seen in exactly the same way as the first two hourly charts.
If minute wave ii is over then minute wave iii down has begun. At 1,081 minute wave iii would reach 4.236 the length of minute wave i. This target would be at least three weeks away.
Within the new downwards trend the first wave of minuette wave (i) would most likely be incomplete. The following correction for minuette wave (ii) may not move beyond its start above 1,215.20.
While all three wave counts expect at least a little downwards movement this bearish alternate expects a lot of downwards movement. It should see a strong increase in downwards momentum with an increase in volume quite likely. Although it has a lower probability it remains viable.
A new low below 1,175.28 would add a little confidence to this idea. For a big third wave to be confirmed it requires a new low below 1,131.09 for final confirmation.
This analysis is published about 05:23 p.m. EST.