A new high above 1,191.71 invalidated two hourly Elliott wave counts confirming the prior downwards wave as complete.
Summary: The bull wave count now expects a third wave up has begun, and the target is the same at 1,288. The bear wave count now expects a second wave correction is either over as a rare triple zigzag, or may continue sideways as a flat correction for a few days. A new low below 1,162.80 at any time would be a strong bearish indicator. To the upside, a new high above 1,232.49 would invalidate the bear wave count and confirm the bull wave count.
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Changes to last analysis are italicised.
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. I have tried to see a solution for this movement, and no matter what variation I try it always has a major problem.
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. Volume does not support this bull wave count.
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) for an up day. 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 (C) is likely to subdivide as an impulse to exhibit structural alternation with the leading diagonal of intermediate wave (A). This intermediate wave up may be intermediate wave (3) which may only subdivide as an impulse.
Minor wave 2 is over here. Minute wave c is just 2.7 longer than 1.618 the length of minute wave a. At 1,288 minor wave 3 would reach 1.618 the length of minor wave 1.
Within minor wave 3, no second wave correction may move beyond its start below 1,162.80.
A new high above 1,232.49 would eliminate the bear wave count and provide full confidence in the targets.
Hourly Bull Wave Count
The leading diagonal was invalidated. The length of the final fifth wave was longer than the third, leaving the third wave the shortest and violating a core Elliott wave rule.
If minor wave 3 has begun, then it must be starting with a more common impulse for the first wave and it must be incomplete.
Momentum indicates that the last wave up labelled subminuette wave iii is the middle of a third wave. There is no Fibonacci ratio between subminuette waves i and iii so it would be likely that subminuette wave v exhibits a Fibonacci ratio to either of subminuette waves i or iii. At 1,199 subminuette wave v would reach equality in length with subminuette wave i.
Subminuette wave iv may not move into subminuette wave i price territory below 1,183.05. If this price point is breached, then for the bull wave count it may be another second wave correction and the invalidation point for that would be at 1,175.27. That would see subminuette wave iii incomplete.
The bull wave count does not yet expect a second wave correction to begin, because it is not possible to see a complete five up either as an impulse or a diagonal.
When the second wave correction does arrive it may not move beyond the start of minute wave i below 1,162.80.
Draw a channel about the middle of this third wave using Elliott’s first technique as shown. The fourth wave should find support at the lower edge of the channel, if it moves sideways and takes up more time. The final fifth wave up may find resistance at the upper edge of the channel.
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. For this piece of movement, the bear wave count has a much better fit than the bull wave count.
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.
4. Volume at the weekly and daily chart continues to favour the bear wave count. Since price entered the sideways movement on 27th March it is a downwards week which has strongest volume, and it is downwards days which have strongest volume.
5. On Balance Volume on the weekly chart recently breached a trend line from back to December 2013. This is another bearish indicator.
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 44 days long.
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.
Minor waves 1 and 2 are complete. Minute wave i within minor wave 3 may be incomplete on the hourly chart.
Minute wave ii may not move beyond the start of minute wave i above 1,232.49.
The bull and bear wave counts both see a five wave impulse down either incomplete and requiring a final fifth wave, or complete at Friday’s low.
If this impulse takes price below 1,142.82, then the bull wave count would be invalidated. But only a new low below 1,131.09 would invalidate any variation of a bull wave count and provide full and final confirmation for a bear wave count.
When this five wave impulse is complete, then the bull wave count will expect a third wave up and this bear wave count will expect a second wave correction. At that stage, the bear wave count would be invalidated with a new high above 1,232.49 and the bull wave count would be confirmed.
Main Hourly Bear Wave Count
Minute wave i is confirmed now as over. The question now is whether or not minute wave ii is complete.
Minute wave ii is a lower degree second wave within a third wave one and two degrees higher. The strong downwards pull of intermediate wave (3) and minor wave 3 may force minute wave ii to be more brief and shallow than a second wave correction normally is. It is reasonably likely that minute wave ii is over already, lasting just three days and ending just above the 0.382 Fibonacci ratio.
My only concern for minute wave ii at this stage is whether or not the third zigzag is over or not. It is possible that minuette wave (z) may yet continue higher as a more obvious three wave structure. A new low below its start at 1,175.27 would confirm that it is over, because subminuette wave b within it may not move beyond the start of subminuette wave a.
At that stage, I would have confidence that the upwards wave is over for now and the next movement down has begun. At 1,080 minute wave iii would reach 1.618 the length of minute wave i.
Triple zigzags are reasonably rare structures, but I have seen at least two previously on Gold.
Alternate Hourly Bear Wave Count
This alternate wave count for the bear simply moves the degree of labelling within minute wave ii all down one degree. The triple zigzag may be only minuette wave (a).
It is not possible to have a multiple within a multiple, and the maximum number of corrective structures within a multiple is three. If minuette wave (a) is a multiple triple zigzag, then minute wave ii may not itself be a combination. When an A wave subdivides as a corrective structure the larger correction may only be a flat correction.
If minute wave ii is a flat correction, then minuette wave (b) within it must retrace a minimum 90% at 1,165.76. Minuette wave (b) may make a new low below the start of minuette wave (a) at 1,162.80 and in fact is reasonably likely to do so because the most common type of flat is an expanded flat, which requires minuette wave (b) to retrace 105% or more of minuette wave (a).
If minute wave ii continues sideways as a flat correction, it may end about the 0.618 Fibonacci ratio of minute wave i at 1,205.
If the next wave down is a clear three wave structure, and does not show a strong increase in downwards momentum, then minute wave ii may be continuing sideways as a flat correction. If the next wave down is a clear five wave structure, and shows a strong increase in downwards momentum, then minute wave ii would most likely be over as per the main hourly bear wave count.
At 14.42, ADX is still not above 15. No clear trend is yet indicated. A range bound system would still be indicated as the best approach to this market.
The lower lilac trend line has now been breached and volume slightly increased for Wednesday’s session. With price back into the trading range an upwards swing would not be more likely from here, using this approach.
The downwards sloping aqua blue trend line may provide some resistance. If that trend line is breached also, then more upwards movement may become more likely until price reaches resistance again at the upper horizontal lines and Stochastics returns to overbought.
Overall volume still favours a downwards breakout eventually. During this sideways movement, it is still down days and a down week which have higher volume. On Balance Volume breaches a trend line (lilac line) which began in December 2013, and the breach is significant.
While price has made higher lows On Balance Volume has made lower lows (green trend lines). This small rise in price is not supported by volume, and it is suspicious.
This analysis is published about 05:54 p.m. EST.