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The main Elliott wave count expected a fourth wave correction to unfold downwards / sideways. This is what happened, although it is more time consuming than expected.

Summary: The main hourly wave count has a higher probability than the alternate hourly wave count. The target for minor wave 3 to end remains at 1,303. In the short term I expect upwards movement to 1,212. That would complete a five up on the hourly chart, so should be followed by a three down.

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Main Daily Wave Count

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.

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 then alternate wave counts will be required to manage the various possibilities of cycle wave b continuing.

A new high above 1,308.10 would invalidate the alternate and confirm this main wave count at primary and cycle degree.

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 sill 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.

It is for these reasons that I will retain the alternate until price confirms finally which wave count is correct and which is invalidated.

Wednesday’s candlestick completed a bullish engulfing pattern. This is the strongest bullish candlestick pattern and supports the main hourly wave count.

Volume for downwards movement of minor wave 2 is lower than the prior upwards movement of minor wave 1. Importantly, Wednesday’s session sees volume increase beyond that seen for the prior three downwards days, which supports the main hourly wave count.

Minor wave 1 lasted seven days (no Fibonacci number) and minor wave 2 is now most likely over lasting a Fibonacci three days. If minor wave 3 exhibits a Fibonacci duration it may last thirteen days, which would see it end in eleven more sessions (depends on how long the corrections within it last).

Main Hourly Wave Count

Minuette wave (iv) is a complete three wave structure showing some alternation with minuette wave (ii): minuette wave (ii) was a deep 0.8 single zigzag and minuette wave (iv) is a more shallow 0.49 double zigzag.

There is no Fibonacci ratio between minuette waves (i) and (iii), making it more likely that minuette wave (v) will exhibit a Fibonacci ratio to either of minuette waves (i) or (iii). Equality with minuette wave (i) would see minuette wave (v) truncated, so the next likely ratio would be 0.618 the length of minuette wave (iii) at 1,212.

Keep in mind that Gold sometimes exhibits particularly strong swift fifth waves typical of commodities. If this happens the target may be more likely equality with minuette wave (iii) at 1,223.

When minute wave i is complete then the invalidation point must move down to the beginning of minute wave i at 1,178.59, and a deep second wave correction would be expected to last about two or three days.

The mid term target for minor wave 3 remains the same at 1,303. Along the way up to that target two corrections, minute waves ii and iv, should show up on the daily chart so that minor wave 3 is a clear five wave impulse at the daily chart level.

Minute wave (iv) breached the channel which was drawn using Elliott’s first technique, so redraw the channel now using the second technique. Draw the first trend line from the ends of minuette waves (ii) to (iv), then place a parallel copy on the end of minuette wave (iii). Minuette wave (v) may end midway within the channel, or it may end at the upper edge.

Minuette wave (iv) may not move into minuette wave (i) price territory below 1,190.88.

Alternate Hourly Wave Count

It is still possible that minor wave 2 may continue sideways as a double combination, but this wave count is not supported by volume or momentum. It is my judgement that this alternate wave count has a very low probability, so I would only use it if the main hourly wave count is invalidated with a new low below 1,190.88. I publish it only as a “what if”, to consider all possibilities.

Double combinations are sideways movements. Their purpose is to take up time. To achieve this purpose a double combination normally has a deep X wave which is most often a zigzag. Within a double combination the X wave may make a new price extreme beyond the start of the first structure in the combination. The second structure in a double combination normally ends close to the same level as the first.

If minor wave 2 continues it may last a Fibonacci eight days in total.

The second structure for minute wave y may be either a flat or a triangle. At this stage a flat correction looks more likely. Within that flat correction minuette wave (b) must retrace a minimum 90% of minuette wave (a) and so must move up to 1,207. Minuette wave (b) may make a new price extreme beyond the start of minuette wave (a) above 1,208.72, as there is no upper invalidation point for this alternate wave count.

The structure of the next wave up will tell us finally which wave count, main or alternate hourly, is correct. If the next wave up subdivides as a three it may be a b wave. It if subdivides as a five this alternate will be discarded.

Minute wave y is most likely to end about the same level as minute wave w at 1,179 to achieve the purpose of a sideways correction.

Minor wave 2 may not move beyond the start of minor wave 1 below 1,142.82.

If price moves below 1,190.88 in the trading session the main hourly wave count would be invalidated and this alternate would be confirmed.

Alternate Daily 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 956.97 primary wave 5 would reach equality in length with primary wave 1. Primary wave 5 may last a total Fibonacci 55 weeks. So far it is now in its 37th 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 was the first warning this wave count may be wrong.

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 main 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 also reduces the probability of this wave count.

Although the invalidation point is at 1,308.10, this alternate wave count should be discarded long before that price point is reached. If the maroon channel is breached again by one full daily candlestick above it and not touching it then I would discard this alternate wave count.

A new low below 1,131.09 would confirm that intermediate wave (3) down is underway.

I will allow for the possibility that minor wave 2 may be completing as a big zigzag, but the duration is longer than minor degree corrections normally are so the probability of this idea is very low. The probability of this alternate wave count has further reduced today.

This wave count now needs to prove itself. It needs to show strong downwards movement with an increase in momentum and an increase in volume. A new high above 1,219.99 would further reduce the probability of this alternate at this stage, I may discard it at that point.

This alternate wave count remains technically possible.

This analysis is published about 05:26 p.m. EST.