Upwards movement was expected and is enough to provide full confirmation of the two main Elliott wave counts, which still do not diverge at this stage.
Summary: Both bull and bear wave counts still expect upwards movement to continue for a few days. The bull wave count has a minimum requirement at 1,232.49 and a maximum at 1,242.91. Upwards movement for the bull count may last about another three days. The bear count requires upwards movement to a minimum at 1,233.82 and its maximum is the upper maroon trend line on the daily chart. It may last a little longer, maybe a further six days. I favour the bull wave count. A short term target for upwards movement for both bull and main bear wave counts is at 1,220.
To see weekly charts for bull and bear wave counts 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 again 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. The possible leading diagonal for minor wave 1 and particularly minute wave ii within it look too large.
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 (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.
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. The fourth wave must overlap first wave price territory.
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. So far minute wave iv is 0.83 of minute wave iii, a little deeper than normal range.
The maximum depth for minute wave iv is at 1,178.08 where it would reach equality in length with minute wave ii. Because the diagonal is contracting the fourth wave may not be longer than equality with the second wave, should be shorter, and the trend lines should converge. Minute wave iv is now over. Within minute wave v no second wave correction nor B wave may move beyond its start below 1,180.36.
Second wave corrections following leading diagonals in first wave positions are commonly very deep. When this leading diagonal structure for minor wave 1 is complete, then minor wave 2 should unfold lower, may be expected to reach at least the 0.618 Fibonacci ratio of minor wave 1 or may be quite a bit deeper than that, and may not move beyond the start of minor wave 1 below 1,142.82.
The wave count at the hourly chart level is the same for this bull and the main bear wave count below. A second wave, here subminuette wave ii, continued sideways to complete as an expanded flat correction. Micro wave B is an unusual length, at 2.65 times the length of micro wave A. But the subdivisions fit perfectly. Micro wave C has no Fibonacci ratio to micro wave A, but it has moved slightly below the end of micro wave A avoiding a truncation and a very rare running flat, and subdivides perfectly as a five wave impulse. Because the subdivisions fit perfectly and expanded flats are very common structures, it looks like this portion of the analysis is correct.
Within subminuette wave iii, micro waves 1 and now 2 are most likely complete. Micro wave 2 is a very deep correction of micro wave 1. It subdivides okay on the five minute chart as a completed zigzag, and is finding support about the upper edge of the channel, which previously provided resistance. At 1,220 micro wave 3 would reach 1.618 the length of micro wave 1.
Micro wave 2 may not move beyond the start of micro wave 1 below 1,184.58. If this invalidation point is breached, then the invalidation point moves down to where it is on the daily chart, to 1,180.36. At that stage, it may be that minuette wave (a) was already complete at the high labelled subminuette wave i, and minuette wave (b) may be unfolding lower. This is technically possible, but I consider it extremely unlikely because the subdivisions don’t have a good fit and it would see a remarkably short minuette wave (a).
Minor wave 1 is a leading contracting diagonal. Minute wave v of a leading diagonal may not be truncated and must move above the end of minute wave iii at 1,232.49. Minute wave v must be shorter than minute wave iii in length and may not move beyond equality with minute wave iii above 1,242.91.
Main 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.
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 54th day and it is incomplete. It is now starting to look ridiculous; this is becoming a serious problem for the bear wave count. The bearish alternate below mostly resolves this problem.
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.
When the ending diagonal structure is complete, then this bear wave count expects a strong third wave down for minor wave 3 within intermediate wave (3). At that stage, a new low below 1,142.82 would provide strong indication that the bear wave count would be more likely than the bull wave count. Only a new low below 1,131.09 would provide full confidence.
This hourly bear wave count is essentially the same as the hourly bull wave count.
Minute wave c is an ending expanding diagonal. Minuette wave (v) must be longer than equality in length with minuette wave (iii). It must move above 1,233.82.
Alternate Bear Wave Count
I will continue to publish this alternate bear wave count because it resolves much of the problem of minor wave 2 being too long in duration for the main bear wave count.
Here minor wave 2 is a completed zigzag which lasted 44 days, just over twice the normal duration for a minor degree correction within an intermediate degree impulse for Gold. If minor wave 3 has begun, then it may now have two overlapping first and second wave corrections.
The problem today, which further reduces the probability of this wave count, is minuette wave (ii) has breached a base channel drawn about minute waves i and ii. Price should have found resistance at the upper edge of this small pink channel. However, base channels don’t always work. Price has come strongly back down.
This alternate bear wave count has a very important implication. If it is correct, then a very strong third wave down may have just begun. It requires confirmation. A new low initially below 1,180.36 would provide enough confirmation for this wave count to be taken seriously. If that happens, then this wave count would expect an imminent strong increase in downwards momentum.
For confidence in the target at 957 a new low below 1,142.82 and finally 1,131.09 is required.
ADX is still below 15 and flat. Gold remains range bound. No clear trend is yet evident and so a range bound trading system should be used as opposed to a trend following system.
This range bound system I am outlining here uses Stochastics to indicate where each swing begins and ends. Stochastics is returning from oversold currently, and so a swing higher until Stochastics is again overbought would now be expected.
The horizontal trend lines delineate the upper and lower levels of support and resistance. The aqua blue trend lines are close to the extreme edges, the inner lilac lines are 0.5% of market value within the outer lines. These horizontal lines continue to show mostly where price is finding support and resistance.
While ADX remains below 15 this system should continue to be used. The +DX and -DX lines are not used, nor is the EMA, for this system. Only Stochastics and the trend lines are used in conjunction with the ADX line.
This analysis is published about 05:07 p.m. EST.