The short term target for a little upwards movement was at 1,217. Gold moved higher to 1,215.03 and then turned down exactly as expected.

Summary: With price above 1,200.03 all four ideas remain valid. The main bull and main bear wave counts (yesterday’s alternate bear) are preferred. Their target for a downwards wave to complete a zigzag is at 1,197 (bear) or 1,186 (bull and second target for bear). This target may be met in another two days.

Note: The text for daily charts changes little from day to day. I’m going to trial a system where the changes to that text for each day will be italicised. This may help longer standing members quickly assess the new analysis. All text for hourly charts is usually rewritten each day.

To see weekly charts for bull and bear wave counts go here.

Bull Wave Count

Click chart to enlarge.

The bull wave count sees primary wave 5 and so cycle wave a a complete five wave impulse on the weekly chart.

Pros:

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.

Cons:

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 (of which intermediate wave (A) or (1) is) 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 now most likely to be a complete zigzag. Minute wave iv down must subdivide as a zigzag, must overlap back into minute wave i price territory, and may not be longer than equality with minute wave ii because this diagonal is contracting. The maximum depth for minute wave iv is at 1,178.08. Minute wave iv may be over in one more day if it lasts a total Fibonacci five days, but it may need a little longer than that.

Draw the diagonal ii-iv trend line as shown. Minute wave iv is likely to end when price touches this lower trend line, which may be a better guide for it than any price target. If this works then the target at 1,186 may be a little too low.

Click chart to enlarge.

Minute wave iv must subdivide as a zigzag. So far minuette waves (a) and now most likely (b) also are complete.

Minuette wave (b) looks to be nicely in proportion to minuette wave (a), and is very likely to be over here as a single expanded flat correction. There is no Fibonacci ratio within it between subminuette waves a and c.

The risk today is that minuette wave (b) may continue sideways for another few days as a double flat or double combination. A new high now above 1,215.03 would indicate a continuation of minuette wave (b). If that happens, only very choppy overlapping sideways movement would be expected because double flats and double combinations should move price sideways to take up time and do not have a slope against the trend. The invalidation point for this idea is at 1,232.49.

In the first instance, now a breach of the upper edge of the green channel containing this zigzag would be indication that minuette wave (b) is continuing. If minuette wave (b) is over then upwards corrections should find strong resistance at the upper edge of this channel, which should not be breached.

At 1,186 minuette wave (c) would reach equality in length with minuette wave (a). If it can reach the target in just one day, then minute wave iv may total a Fibonacci five days. However, it looks like it may need a little longer than that and may even last up to four days if minute wave iv totals a Fibonacci eight days.

Minute wave iv is most likely to end within the range of 0.66 to 0.81 the length of minute wave iii, between 1,191 to 1,182. The target at 1,186 fits nicely within this normal range.

Minute wave iv may not be longer than equality with minute wave ii because this diagonal is contracting. It may not move below 1,178.08.

Alternate Bull Wave Count

Click chart to enlarge.

Within a leading diagonal, the second and fourth waves must be zigzags. The first, third and fifth waves are most commonly zigzags (main bull wave count), but they may also be impulses. Both structures must be considered for the bull wave count. The alternate looks at the possibility that minute wave iii is an impulse.

Within minute wave iii, if it is an impulse then minuette wave (iv) subdivides perfectly as an expanded flat correction and must be over here. There is almost no room left for it to move lower, and it may not move into minuette wave (i) price territory below 1,200.03.

Click chart to enlarge.

This wave count is an alternate for several reasons. The main bull wave count is preferred.

At this stage, if minuette wave (v) has begun it would reach equality in length with minuette wave (iii) at 1,232. This wave count now expects a strong third wave up to be unfolding.

Subminuette wave ii is not finding support at the lower edge of the channel containing this possible five wave impulse up. This does not look right, but it’s only a very small concern.

Minuette wave (iv) of an impulse may not move into minuette wave (i) price territory below 1,200.03.

Bear Wave Count

Click chart to enlarge.

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.

Pros:

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.

Cons:

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 48th day and it is incomplete. It is now starting to look ridiculous; this is becoming a serious problem for the bear wave count.

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 structure which looks most likely at this stage to be an ending expanding diagonal.

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.

There are only two structural possibilities for minute wave c. It must be a five wave structure so it may be only an impulse or ending diagonal. The two wave counts for this bear count will look at both of those structural possibilities.

Main Bear Hourly Count

Click chart to enlarge.

This was yesterday’s alternate hourly wave count for the bear. I am swapping them over today because this idea has a better fit despite expanding diagonals being less common than simple impulses.

The diagonal for minute wave c would be expanding because minuette wave (iii) is longer than minuette wave (i) and now also minuette wave (iv) is longer than minuette wave (ii). Ending diagonals require all sub waves to subdivide as zigzags. This main bear wave count does not differ in expected direction from the main bull wave count for the short term

Minuette wave (iv) would reach the normal range of between 0.66 to 0.81 the length of minuette wave (iii) between 1,198 to 1,189. At 1,197 subminuette wave c would reach 0.618 the length of subminuette wave a, taking minuette wave (iv) to within the normal range. If the structure is incomplete there or if price moves below this first target, then the next target would be the same as for the main bull wave count at 1,186.

Minuette wave (iv) must move below 1,200.03 because the fourth wave of a diagonal must overlap back into first wave price territory.

Minuette wave (iv) may not move beyond the end of minuette wave (ii) below 1,179.03.

This main bear wave count has the same risk today as the main bull wave count. It is possible that submineutte wave b is not over and may continue sideways for a few days as a double flat or double combination (the second structure to be a zigzag or triangle). This would be first indicated with a breach of the upper edge of the channel, and thereafter a new high above 1,215.03. If that happens, then only choppy overlapping sideways movement would be expected. The invalidation point for this idea is at 1,232.49. Subminuette wave b may not move beyond the start of submineutte wave a above 1,232.49.

Alternate Bear Hourly Count

Click chart to enlarge.

This wave count is today an alternate. It has a horrible fit within subminuette wave b, whether this correction is seen as a b wave or a fourth wave. This must reduce the probability of this wave count.

Minute wave c may be unfolding as a simple impulse. Within it, minuette wave (iv) may not move into minuette wave (i) price territory below 1,200.03.

Like the alternate bull wave count today, this idea expects a strong third wave up to be developing. Minuette wave (v) would be likely to move at least slightly above the end of minuette wave (iii) at 1,232.49. There it would also reach equality in length with minuette wave (i).

Technical Analysis

Click chart to enlarge.

For yesterday’s data, ADX was flat to declining and below 15. This still indicates no clear trend, low volatility and short swings. A range trading system would be advised.

Fast Stochastics has returned from overbought and may be expected to move lower towards oversold territory below 20. Price may be expected to move lower. If it gets that low, it may find support at the lower horizontal trend lines delineating this consolidation.

The very slight increase in volume for Friday’s session may be an early warning that this downwards move could be over either here or very soon, because at the end of a movement an increase in volume is common.

From a regular TA point of view extreme caution is advised. Trading ranges are more difficult to profit from, and it is highly unadvisable for anyone who is not an expert to try and profit from every small swing within them. Trending markets are much easier to trade and profit from. Gold remains range bound.

From an Elliott wave point of view this TA agrees with the wave count. Diagonals are choppy overlapping affairs, their trend is unclear, and they have many corrective properties. This gives me some confidence that the wave count (main bull or bear, both see diagonals unfolding) is correct.

This analysis is published about 04:42 p.m. EST.