A small range for Friday with a small red doji fits the bear Elliott wave count slightly better than the bull.
Notice: The website will be unavailable from Saturday evening to Sunday morning EST for necessary updates. Downtime expectation of only 3-4 hours, but may be longer.
Summary: The bull wave count expects the middle of a third wave up to show a strong increase in momentum. A short term target is at 1,209, and the mid / long term target for the third wave to end is still at 1,288. A new alternate hourly chart for the bull also requires upwards movement on Monday, but the final invalidation point for it is 1,169.60. A new high above 1,192.44 would be short term bullish. The bear wave count expects another five wave move down which may be a third wave or a C wave. A new low below 1,169.60 would be short term bearish, and more downwards movement to at least 1,165.76 should be expected.
To see the bigger picture and weekly charts go here.
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.
Main Hourly Bull Wave Count
It is highly concerning today that the bull wave count cannot manage to complete a five wave structure upwards. If a third wave has begun at minor degree then within it a five wave structure up must begin.
Now there is a series of four overlapping first and second wave corrections. This wave count expects a very strong increase in upwards momentum from here as the middle of a third wave must begin, within minute wave i.
The channel drawn here is a best fit.
If micro wave 2 is continuing sideways, then it may not move beyond the start of micro wave 1 at 1,175.27.
If the first invalidation point is breached, then I would use the alternate hourly bull wave count below.
Alternate Hourly Bull Wave Count
The other structural possibility for a first five up is a leading diagonal. For a leading diagonal the contracting variety is more common (leading expanding diagonals are not rare but they’re not very common either). This reduces the probability of this wave count.
The subdivisions do have a better fit here though.
Within a leading diagonal, sub waves 2 and 4 must be zigzags and sub waves 1, 3 and 5 are most commonly zigzags but may also be impulses. Here minuette wave (i) fits perfectly on the five minute chart as a zigzag and minuette wave (iii) fits on the hourly chart as a bigger zigzag. The diagonal would be expanding.
The most common depth for fourth and second wave corrections within diagonals is between 0.66 to 0.81 the prior wave. Here minuette wave (ii) is 0.54 of minuette wave (i), shallower than normal. Minuette wave iv is 0.73, within normal depth.
Because the diagonal is expanding minuette wave (v) must be longer than equality in length with minuette wave (iii) at 1,199. At 1,202 subminuette wave v would reach 2.618 the length of subminuette wave a and the minimum length would be met.
The rule for the end of a fourth wave of a diagonal is it must overlap back into first wave price territory. This one does. If it continues any lower the rule states it may not move beyond the end of the second wave below 1,169.60.
If minuette wave (iv) is over now, then within the final zigzag of minuette wave (v) subminuette wave b may not move beyond the start of subminuette wave a below 1,175.76.
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.
A new low below 1,142.82 would provide a lot of confidence in this bear wave count. At that stage, the bull wave count may not be continuing its second wave correction. 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.
Main Hourly Bear Wave Count
Because of the small inside day for Friday and the amount of time taken with this sideways movement, it looks more likely to be a B wave than a second wave correction. I am swapping over the main and alternate bear hourly wave counts for this reason today. I would consider this main hourly bear count to be about 55% likely, and the alternate below the remaining 45% likely.
Minute wave ii may be an incomplete flat correction. When an A wave subdivides as a “three” (a general term for a corrective structure) rather than a five then the correction must be a flat. Minute wave ii may not be continuing sideways as a combination because multiples may not exist within multiples.
If minute wave ii is continuing sideways as a flat correction, then within it minuette wave (b) must be a corrective structure and must retrace a minimum 90% of minuette wave (a) at 1,165.76. Minuette wave (b) may make a new low below the start of minuette wave (a) at 1,162.80. There is no maximum downwards limit for a B wave within a flat correction, but there is a convention that expects it is unlikely to be more than twice the length of the A wave. This limit would be at 1,133. The maximum common length of a B wave within a flat correction is 138% of the A wave, which would be at 1,152.
Because an A-B-C of a zigzag subdivides 5-3-5, it unfolds exactly the same as the start of an impulse. The next move down for the bear wave count may be subminuette wave c of a zigzag, or it may be a third wave as per the alternate below. If the next five down is about even in length with subminuette wave a at 17 and does not show a very strong increase in downwards momentum, then it may be a C wave. But if it is much longer than 17 and shows a strong increase in downwards momentum, then it would more likely be a third wave as per the alternate bear hourly count below.
At 1,186 micro wave C would reach equality in length with micro wave A. Subminuette wave b may not move beyond the start of subminuette wave a above 1,192.44.
Alternate Hourly Bear Wave Count
This alternate expects that a third wave for minute wave iii is beginning within a third wave at minor and intermediate degree. The next move down should be very strong indeed, if this wave count is correct.
Subminuette wave ii is incomplete. At 1,186 micro wave C would reach equality in length with micro wave A.
At 1,080 minute wave iii would reach 1.618 the length of minute wave i.
Subminuette wave ii may not move beyond the start of subminuette wave i above 1,192.44.
Weekly Chart: 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.
Daily Chart: During the sideways range that Gold entered back on 27th March it is downwards days for 9th April, 29th April and 30th April which have the highest volume. This may be some indication that eventually when the breakout comes it may be more likely down than up. This does not always work, but it works often enough for it to be a tendency to look out for. It is a bearish indicator, but it is not definitive.
At 13.87 ADX is still below 15. ADX is still indicating no clear trend is yet evident. A range bound trading system is still better than a trend following system for this market.
This approach now would expect an upwards swing to continue from here because Stochastics is returning from oversold and price is moving up from support. However, the downwards sloping aqua blue trend line is providing strong resistance. With the weight of bearish volume indicators, it is possible that a bearish breakout from this range could be coming very soon. If traders are expecting price to make another upwards swing from here, then extreme caution is still advised. It may be wise to wait to see if that downwards sloping aqua blue trend line can be breached before any confidence can be had that the next upwards swing is indeed underway.
This analysis is published about 06:22 p.m. EST.