Yesterday’s Elliott wave analysis expected it was extremely likely price would move higher, although confirmation was required by a channel breach on the hourly chart and a new high above 1,206.49. We did not get confirmation of a trend change and price moved lower.
Summary: The wave count is changed substantially for the mid term. The main wave count expects more downwards movement to 1,172. This would be confirmed with a new low below 1,178.59. The alternate wave count follows on from yesterday’s analysis, and it too expects downwards movement but only to 1,180. The price point to differentiate the two ideas is 1,178.59. The trend at intermediate, primary and cycle degree remains up, but in the short term a correction is not over yet.
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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.
It is also possible that primary wave A will subdivide as a five wave impulse if cycle wave b is a big single zigzag. This idea would relabel intermediate waves (A), (B) and (C) to intermediate waves (1), (2) and (3) within primary wave A trending upwards. The length of this current upwards move labelled intermediate wave (C) on the chart will indicate if this scenario is possible.
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.
The wave count is changed to see minor wave 2 an incomplete expanded flat correction. So far it has lasted 10 days and is beginning its 11th day. If it completes in another three sessions it may end in a total Fibonacci 13.
During the correction for minor wave 2 it is up days which have strongest volume. This indicates that the overall trend is up and supports this wave count.
Main Hourly Wave Count
Within the expanded flat of minor wave 2 minute wave b can be seen as a double zigzag, and it does have a three wave look to it on the daily chart. Minute wave b is a 110% correction of minute wave a indicating an expanded flat.
In this instance I do not think that minute waves a and c will exhibit a Fibonacci ratio to each other because that would give a target for minute wave c 1.618 the length of minute wave a at 1,157. That target looks to be too low considering how minute wave c is unfolding, although it may be reached if minuette wave (v) is a swift strong extension within minute wave c.
A more likely target of minute wave c to end may be at 1,172 where minor wave 2 would reach the 0.618 Fibonacci ratio of minor wave 1. It is extremely likely that minute wave c will make at least a slight new low below the end of minute wave a at 1,178.59 to avoid a truncation and a very rare running flat.
Minute wave c must subdivide as a five wave impulse. So far within it minuette waves (i), (ii) and (iii) may be complete. Minuette wave (iii) subdivides perfectly as an impulse, and this part of the wave count has a perfect fit.
Minuette wave (iii) is just 0.28 short of 1.618 the length of minuette wave (i).
Ratios within minuette wave (iii) are: there is no Fibonacci ratio between subminuette waves i and iii, and subminuette wave v is 0.79 longer than 0.382 the length of subminuette wave v.
Ratios within subminuette wave iii are: micro wave 3 is 0.95 short of 2.618 the length of micro wave 1, and micro wave 5 is 0.99 longer than 1.618 the length of micro wave 1.
The middle of the third wave subdivides perfectly as an impulse and has the strongest downwards momentum of this movement so far.
Minute wave c does not fit into a channel drawn using either of Elliott’s techniques. The channel drawn here is a best fit. It is possible if the lower trend line continues to provide support that minute wave c could continue slowly for another three days towards the target.
Minuette wave (iv) looks like it may be unfolding as a triangle. If it gets that far it should find resistance at the upper edge of the best fit channel. It may not move into minuette wave (i) price territory above 1,211.10.
It is worth noting that within this impulse of minute wave c both subminuette waves ii and micro wave 2 would breach a base channel drawn about minuette waves (i) and (ii). This is a perfect illustration of how base channels work most of the time, but not all of the time. In this instance the base channel would have been breached completely and substantially, and price would be still above the upper edge of it.
Alternate Hourly Wave Count
This wave count follows on directly from yesterday’s analysis.
Although the blue base channel about minor waves 1 and 2 is now breached by downwards movement, this wave count remains entirely viable.
The breach of the base channel reduces the probability of this wave count to an alternate.
The current sideways movement within subminuette wave v does not fit at all well within this wave count. This further reduces the probability of this wave count today.
A second wave correction within a third wave is not usually this time consuming or deep. That also reduces the probability of this wave count today.
At 1,180 minuette wave (c) would reach 2.618 the length of minuette wave (a).
I have adjusted the wave count within minute wave ii. Here the subdivisions are seen in the same way as the main wave count, because A-B-C for a zigzag and 1-2-3 subdivide the same way.
Minute wave ii may not move beyond the start of minute wave i below 1,178.59.
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 in 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.
If the next green candlestick corresponds with higher volume this wave count will further reduce in probability. If however the next green candlestick corresponds with volume which is lower than the last three downwards days, this wave count could increase in probability.
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 08:46 p.m. EST.