Upwards movement was expected for both the bull and main bear Elliott wave counts.
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 now need to last longer than a Fibonacci five days total for minute wave v. 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 further five days. I favour the bull wave count. A short term target for upwards movement for both bull and main bear wave counts is now at 1,218. If there is a new low below 1,180.36, the bear alternate may be correct because it expects a strong third wave down.
Weekly charts are updated today.
Changes to last analysis are italicised.
Weekly Bull Wave Count
Cycle wave a may be a complete five wave impulse. Within it, primary wave 2 is a deep 0.68 running flat (the subdivisions fit and intermediate wave (C) is only slightly truncated) lasting 53 weeks, and primary wave 4 is a shallow 0.27 regular contracting triangle lasting 54 weeks. There is perfect alternation and almost perfect proportion between primary waves 2 and 4.
Primary wave 3 is 12.54 short of 1.618 the length of primary wave 1. There is no adequate Fibonacci ratio between primary wave 5 and either of 1 or 3.
Because cycle wave a subdivides as a five wave structure cycle wave b may not move beyond its start above 1,921.15.
Cycle wave b may be any one of more than 13 possible corrective structures. It should last one to several years, move price either sideways or higher, and clearly break out of the channel about cycle wave a, which would provide full confidence in a cycle degree trend change.
At this stage within cycle wave b it is possible to narrow down the options for primary wave A. A waves may subdivide as either threes or fives; the only structures they may not be are triangles. This one has the first move up labelled intermediate wave (A) as a leading expanding diagonal. I cannot see a solution where this move can subdivide as a three (with the sole exception of a very rare triple zigzag which does not have the right look) so I am 99.9% confident this movement is a five. That means primary wave A may only be a zigzag or an impulse. It also means that if intermediate wave (B) to continue sideways it may not move beyond the start of intermediate wave (A) below 1,131.09. That is why 1,131.09 is the final price point for confirmation of any bear wave count.
Draw the channel from the lows labelled primary waves 1 to 3, then place a parallel copy on the high labelled primary wave 2. There is a small breach of the channel within cycle wave b, which is the first indication that cycle wave a may be over.
Primary wave 5 does not subdivide perfectly as an impulse on the daily chart and for this reason I retain the weekly bear wave count.
On Balance Volume has breached the long held trend line which began in December 2013. At the weekly chart level this is bearish.
Daily 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. 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.
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.
The diagonal of minor wave 1 is contracting so minute wave v may not be longer than equality in length with minute wave iii. The maximum for minute wave v is equality with minute wave iii at 1,242.91.
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.
Main Hourly Bull Wave Count
As yesterday, the bull and main bear wave counts are essentially the same at the hourly chart level.
This wave count expects minute wave v to be a zigzag, which is the most likely structure, but it may be an impulse.
Minuette wave (a) must subdivide as a five wave structure, either an impulse or a leading diagonal. An impulse is more likely. A leading diagonal is also possible, and if we see a new low below 1,184.58 within the next 24 hours that is the idea I would use. It is published below.
On the five minute chart, the upwards wave labelled submicro wave (1) fits perfectly as a five wave impulse. Submicro wave (2) fits as a completed zigzag, but may yet move lower as a double zigzag. Submicro wave (2) may not move beyond the start of submicro wave (1) below 1,186.
At 1,218 micro wave 3 would reach 1.618 the length of micro wave 1.
The next wave up must show a strong increase in upwards momentum. It should do that in the next 24 hours if this wave count is correct.
Leading diagonals may not have truncated fifth waves. Minute wave v must move above 1,232.49.
Alternate Hourly Bull Wave Count
The other structural possibility for minuette wave (a) is a leading diagonal. The contracting variety is more common, so subminuette wave iii would be likely to be shorter than subminuette wave i which was 24.08 in length. Subminuette wave iii must move beyond the end of subminuette wave i above 1,204.44.
A leading diagonal has sub waves 2 and 4 which must subdivide as zigzags, and sub waves 1, 3 and 5 which are most commonly zigzags but may sometimes be impulses. Waves 2 and 4 have a common depth of between 0.66 to 0.81 the prior actionary wave.
Subminuette wave ii may move lower. At 1,186 micro wave C would reach 0.618 the length of micro wave A. This would see subminuette wave ii a 0.77 correction of subminuette wave i, right within normal range. It may not move beyond the start of subminuette wave i below 1,180.36.
This idea has a lower probability than the impulse idea for minuette wave (a). I publish it today to consider all possibilities, and to illustrate why the invalidation point on the daily chart for the main bull wave count is at 1,180.36. This idea also works for the bear wave count at the hourly chart level.
Weekly Bear Wave Count
This weekly chart is identical to the first bullish weekly chart up to the end of primary wave 4. Thereafter, it looks at the possibility that primary wave 5 is incomplete. At 957 primary wave 5 would reach equality in length with primary wave 1. That would give this impulse for cycle wave a perfect Elliott wave ratios.
So far within primary wave 5, only intermediate waves (1) and (2) would be complete. Intermediate wave (2) has a small breach of the upper edge of the channel containing cycle wave a. If cycle wave a is incomplete this channel should not be breached. This is the first warning this wave count may be wrong.
Within primary wave 5, intermediate wave (1) subdivides perfectly as an impulse. Intermediate wave (2) subdivides perfectly as a very common expanded flat. Intermediate wave (2) looks too large though, further reducing the probability of this wave count.
If the maroon channel is breached again this wave count should be discarded, before price moves above 1,308.10.
The breach of the trend line on On Balance Volume is a bearish indicator and supports a bear wave count. Since the end of intermediate wave (2), strongest volume is within down weeks which is also a bearish indicator. While price is range bound, both bull and bear wave counts must be considered (both have points for and against). I am not going to try to pick a winner; I will use thorough analysis that identifies which price points will tell us which scenario is correct.
Main Daily 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 55th day and it is incomplete. It is now starting to look ridiculous; this is becoming a serious problem for this 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. At this stage, minute wave c is 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.
Main Hourly Bear Wave Count
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.
The alternate hourly bull wave count also works the same way for this bear wave count. Subminuette wave a may be a leading diagonal. I’ll not publish a chart for it in order to keep the number of charts as reasonable as I can.
Alternate Daily 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.
A problem 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. A green candlestick mostly above this channel further reduces the probability of this wave count today.
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 05:15 p.m. EST.