Downwards movement was confirmed quickly with a channel breach of the hourly chart. Thereafter, a red candlestick was expected for Tuesday’s session.
Summary: I judge it 60% likely that minute wave ii is only halfway through and may continue for another one or two days to either move just sideways or maybe end about 1,196. I judge it 40% likely that minute wave ii is over and a third wave within a third wave may begin upwards. If the next 24 hours sees only choppy overlapping movement with low volume the first scenario will be correct. If the next 24 hours sees clear upwards movement with an increase in upwards momentum and increased volume the second scenario would be correct.
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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 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.
Volume for downwards movement of minor wave 2 is lower than the prior upwards movement of minor wave 1. Tuesday’s session, another down day, shows lower volume which would be expected if this downwards movement is another small correction. Volume indicates strongly that the trend is up.
Minor wave 1 lasted seven days (no Fibonacci number) and minor wave 2 lasted a Fibonacci three days. If minor wave 3 exhibits a Fibonacci duration it may last thirteen days, which would see it end in eight more sessions (depends on how long the corrections within it last).
At 1,303 minor wave 3 would reach 1.618 the length of minor wave 1.
Draw a base channel about minor waves 1 and 2 as shown. Minor wave 3 may have the power to break through resistance at the upper edge of the blue channel.
Main Hourly Wave Count
Minute wave ii is confirmed as underway with a clear breach of the green channel drawn about minute wave i.
So far to the downside there is a complete three wave zigzag. This indicates minute wave ii may be unfolding as either a flat correction, combination or double zigzag.
If minute wave ii is a flat correction then within it minuette wave (b) must retrace a minimum 90% of minuette wave (a) at 1,222.68. If minute wave ii is an expanded flat (the most common type) then minuette wave (b) must be a 105% or more correction of minuette wave (a) at 1,225.19. There is no upper invalidation point for this main wave count for this reason.
If minute wave ii is a double combination then minuette wave (x) has no minimum or maximum length and must only subdivide as a corrective structure. Minuette wave (x) of a combination should be deep and may also make a new high beyond the start of minuette wave (w) at 1,224.35. The purpose of double combinations is to take up time and move price sideways. The second structure in the double may be either a flat or a triangle and would most likely end close to the same level as minuette wave (w) at 1,207.60.
If minute wave ii is a double zigzag then minuette wave (x) has no minimum length and it should be shallow and must subdivide as a corrective structure. The purpose of a double zigzag is to deepen the correction when the first zigzag does not move price deep enough, so double zigzags have a clear slope against the main trend and are not sideways movements. A double zigzag would most likely end about the 0.618 Fibonacci ratio about 1,196.
This main wave count expects either sideways movement for another one or two days, or downwards movement to 1,196 to end in another one or two days.
Minute wave ii may not move beyond the start of minute wave i below 1,178.59.
Alternate Hourly Wave Count
I would judge this alternate idea to be less likely than the main hourly wave count, maybe about 40% likely. Although second wave corrections within a third wave one degree higher may be more shallow and brief than second waves normally are, this wave count looks to be too brief. Movement since the low at 1,207.60 is unconvincing as the start of a third wave, and has breached the base channel drawn about minute waves i and ii. For these reasons this wave count has a lower probability.
The pink channel drawn here is a base channel about minute waves i and ii, and is not the same as the green channel on the main hourly wave count.
If minute wave ii is over then at 1,282 minute wave iii would reach 1.618 the length of minute wave i.
This wave count requires the following four things over the next 24 hours before I have confidence in it:
1. A green candlestick for the next session.
2. An increase in volume for the next session.
3. Clear upwards movement on the hourly chart, as a five wave structure and not a three.
4. An increase in upwards momentum.
If minute wave iii has begun then within it no second wave correction may move beyond the start of its first wave below 1,207.60. Any movement by any amount at any time frame below this point fully invalidates this alternate wave count and would provide confidence that minute wave ii is continuing.
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 957 primary wave 5 would reach equality in length with primary wave 1. Primary wave 5 may last a total Fibonacci 55 weeks. It is now beginning its 39th 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.
Minor wave 2 would now be a completed zigzag. If this alternate is correct it should show itself this week. It now expects a big increase in downwards momentum as a third wave at two degrees begins to gather momentum. An increase in volume as price moves lower would support this wave count. A new low below 1,178.59 would be a strong indication this wave count may be correct.
It is concerning that volume for Tuesday’s down day is lower. Volume continues to not support this wave count, and is a strong indicator that this wave count is wrong.
This alternate wave count remains technically possible. Because the implications are important I will continue to publish it at this stage.
This analysis is published about 05:19 p.m. EST.