Yesterday’s Elliott wave analysis had three hourly wave counts for three different structures for this small fourth wave correction. The triangle was invalidated below 1,211.11 and the combination never produced a B wave which was 90% or more of its A wave. This left only one structure, an expanded flat, with the target to end between 1,206 – 1,204. Price has reached down to 1,205.86.
Summary: It is most likely Gold will move up from here for a final fifth wave. I will have some confidence that the correction is over and the final fifth wave up is underway when price moves above 1,217.28. The target is at 1,236. If it is met in just one day this five wave impulse will total a Fibonacci 13 days or sessions. This is possible, or it may need two days to complete.
Click on charts to enlarge.
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.
1. The size of the upwards move labelled here intermediate wave (A) looks right for a new bull trend at the weekly chart level.
2. The downwards wave labelled intermediate wave (B) looks best as a three.
3. The small breach of the channel about cycle wave a on the weekly chart would be the first indication that cycle wave a is over and cycle wave b has begun.
1. Within intermediate wave (3) of primary wave 5 (now off to the left of this chart), to see this as a five wave impulse requires either gross disproportion and lack of alternation between minor waves 2 and 4 or a very rare running flat which does not subdivide well.
2. Intermediate wave (5) of primary wave 5 (now off to the left of the chart) has a count of seven which means either minor wave 3 or 5 looks like a three on the daily chart.
3. Expanding leading diagonals are are not very common (the contracting variety is more common).
4. The possible leading diagonal for minor wave 1 and particularly minute wave ii within it look too large.
Last week volume shows an increase. This supports the bull count a little, but the increase is not higher than prior down days within the sideways chop. For volume to clearly support the bull wave count it needs to show an increase beyond 187.34 (30th April) and preferably beyond 230.3 (9th April). Only then would volume more clearly indicate a bullish breakout is more likely than a bearish breakout.
Within cycle wave b, primary wave A may be either a three or a five wave structure. 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. At 1,320 intermediate wave (C) would reach equality in length with intermediate wave (A) and primary wave A would most likely be a zigzag. At 1,429 intermediate wave (3) would reach 1.618 the length of intermediate wave (1) and primary wave A would most likely be an incomplete impulse.
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 (with the sole exception of a very rare triple zigzag which does not look right). 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.
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.
Within diagonals, the most common depth of the second and fourth waves is between 0.66 and 0.81. Minute wave ii is 0.67 of minute wave i.
Minute wave iii is unfolding as an impulse and now only needs the final fifth wave up at minuette wave degree to complete. Minute wave iv to follow must overlap back into minute wave i price territory and may not move beyond the end of minute wave ii below 1,169.94.
At the hourly chart level, both bull and bear wave counts see an expanded flat either complete now or very close to completion. Here I will publish an incomplete expanded flat while the hourly chart published under the bear wave count sees the structure complete. Both ideas work exactly the same for bull and bear wave counts.
In trying to see subminuette wave c incomplete the structure does not have as neat a fit as seeing it complete. The problem here is within minuscule wave 3 (red) of submicro wave (1): it does not subdivide easily on the hourly chart as an impulse.
Micro wave 2 was over already when last analysis was published. I had expected it to complete a little higher, but that did not happen.
Within micro wave 3, submicro wave (3) is 0.72 short of 1.618 the length of submicro wave (1).
Ratios within submicro wave (1) are: there is no Fibonacci ratio between minuscule waves 3 and 1, and minuscule wave 5 is 0.18 longer than 1.618 the length of minuscule wave 1. For this piece of movement the second idea presented for the hourly bear count has better Fibonacci ratios.
Ratios within submicro wave (3) are: minuscule wave 3 has no Fibonacci ratio to minuscule wave 1, and minuscule wave 5 is 0.91 longer than equality in length with minuscule wave 3.
Micro wave 3 is incomplete for this idea. At 1,203 it would reach 2.618 the length of micro wave 1.
I do not have a target for subminuette wave c for this idea. Subminuette wave c may not exhibit a Fibonacci ratio to subminuette wave a. The lower edge of the green channel copied over from the daily chart may be the best way to see when minuette wave (iv) ends. It should find strong support at the lower green trend line, and should end there.
Minuette wave (iv) may not move into minuette wave (i) price territory below 1,200.03.
What if I’m wrong? What if we see price move below 1,200.03 in the short term? This is the only scenario I can see at this stage which could explain such a move. For the bear wave count this idea will not work at all.
It is possible that minute wave iii of the leading diagonal is complete as a zigzag. It would be shorter than minute wave i and so the diagonal would be contracting. Minute wave iv may not move below 1,178.08, which gives it a maximum length at no longer than equality with minute wave ii. The diagonal trend lines should converge.
The most common depth of a fourth wave within a diagonal is between 0.66 to 0.81 the length of the third wave. This gives a target range at 1,191 – 1,182.
In trying to see minute wave iii as a complete zigzag there are a couple of problems introduced which the main bull count does not have for this movement. It must ignore a reasonably obvious triangle for micro wave 2 within minuette wave (c). A triangle may not be the sole corrective structure within a second wave.
Micro waves 2 and 4 have good alternation, but they are grossly disproportionate. Micro wave 4 is thirteen times the duration of micro wave 2. This reduces the probability of this count, but does not invalidate it.
If we see a new low below 1,200.03 in the short term this is the count I would use. I would expect price to keep moving lower in a zigzag structure for minute wave iv, but not below 1,178.08.
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.
1. Intermediate wave (1) (to the left of this chart) subdivides perfectly as a five wave impulse with good Fibonacci ratios in price and time. There is perfect alternation and proportion between minor waves 2 and 4.
2. Intermediate wave (2) is a very common expanded flat correction. This sees minor wave C an ending expanding diagonal which is more common than a leading expanding diagonal.
3. Minor wave B within the expanded flat subdivides perfectly as a zigzag.
1. Intermediate wave (2) looks too big on the weekly chart.
2. Intermediate wave (2) has breached the channel from the weekly chart which contains cycle wave a.
3. Minor wave 2 is much longer in duration than a minor degree correction within an intermediate impulse normally is for Gold. Normally a minor degree second wave within a third wave should last only about 20 days maximum. This one is in its 45th day and it is incomplete.
4. Within minor wave 1 down there is gross disproportion between minute waves iv and ii: minute wave iv is more than 13 times the duration of minute wave i, giving this downwards wave a three wave look.
This bear wave count now needs minute wave c upwards to complete as a five wave impulse. The short term outlook for both bull and bear counts is identical.
At 1,236 minuette wave (v) would reach equality in length with minuette wave (i).
Minor wave 2 may not move beyond the start of minor wave 1 above 1,308.10. However, this wave count would be substantially reduced in probability well before that price point is passed. A breach of the upper maroon trend line, a parallel copy of the upper edge of the channel copied over from the weekly chart, would see the probability of this wave count reduced so much it may no longer be published before price finally invalidates it.
In seeing subminuette wave c as complete all sub waves fit nicely.
Ratios within subminuette wave c are: micro wave 3 is 0.50 longer than 1.618 the length of micro wave 1, and micro wave 5 is 0.97 longer than 0.618 the length of micro wave 3.
Ratios within micro wave 3 are: there is no Fibonacci ratio between submicro waves (3) and (1), and submicro wave (5) is 0.84 short of equality in length with submicro wave (3).
Ratios within submicro wave (3) are: minuscule wave 3 is 0.30 longer than 1.618 the length of minuscule wave 1, and minuscule wave 5 is just 0.11 longer than equality with minuscule wave 3. For this piece of movement this second idea presented here has better Fibonacci ratios.
Within minuette wave (v) no second wave correction may move beyond its start below 1,205.86.
For yesterday’s data (now seen only today) ADX finally reached above 15 and has a slight upward slope. This indicates the beginning of a trend.
Data for ADX and Stochastics for Tuesday’s session is not yet shown on the daily chart (it won’t be until the session is complete). If ADX remains above 15 (unlikely) then an upward trend would be indicated. If ADX moves below 15 no clear trend (yet) would be indicated.
This decline for Tuesday has slightly higher volume (higher than the day before). This may potentially indicate a bottom here.
Stochastics indicates price is overbought, but this may be relieved when Tuesday’s data is available.
The upper trend lines did not provide support. If price is breaking out upwards, this is not just a throwback and a move back into the prior zone of support and resistance. That may be slightly concerning from a regular TA point of view, but the Elliott wave picture allows for it as long as price does not move below 1,200.03.
Currently the +DX line (green line) is above the -DX line (red dashed line). This supports an upward breakout as more likely than downward.
This analysis is published about 04:26 p.m. EST.