Upwards movement was expected for the bull and main bear Elliott wave counts, but downwards movement breached their invalidation points. The alternate bear Elliott wave count is now taken more seriously.
Summary: The last swing down will subdivide as either a three or a five. I have three wave counts. The first bull wave count needs upwards movement from here and it must move above 1,232.49. The new second bull wave count needs a little downwards movement, the target is 1,165. The only remaining bear wave count sees a second wave correction moving slowly higher for another day or so but not above 1,232.49. The price point to the upside which differentiates bull and bear is 1,232.49. The price point to the downside which differentiates bull and bear is 1,142.82.
To see the bigger picture and weekly charts go here.
Changes to last analysis are italicised.
First 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. I have a new bull wave count today which sees minor waves 1 and 2 both over. I will favour neither bull wave count and with both expecting upwards movement from here it would be wisest to wait for price to tell us which is correct.
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. Minute wave iv is now almost at its limit, at 0.97 of minute wave iii. Minute wave iv may not be longer than equality in length with minute wave ii so it cannot move below 1,178.08. The diagonal trend lines are now barely converging. This has today reduced the probability of this wave count to about even with the new bullish wave count below.
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 1,242.15.
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.
First Hourly Bull Wave Count
I had expected minute wave iv was complete, but it has moved lower. This wave down is here seen as a complete zigzag. This has slightly better proportions than seeing it as an impulse, but both ideas fit.
The fifth wave of a leading diagonal may not be truncated so minute wave v must move above the end of minute wave iii at 1,232.49. Minute wave v may not be longer than equality in length with minute wave iii because minute wave iii may not be the shortest wave and the diagonal is contracting. This gives a maximum limit for the next wave up at 1,242.15. A new high above 1,242.15 would discard this first bull wave count in favour of the second bull wave count below.
Within the zigzag of minute wave iv, minuette wave (c) is just 0.4 short of 0.236 the length of minuette wave (a).
Ratios within minuette wave (a) are: there is no Fibonacci ratio between subminuette waves iii and i, and subminuette wave v is just 0.01 longer than 0.382 the length of subminuette wave i.
Within minuette wave (a), subminuette wave ii is a shallow 0.40 expanded flat and subminuette wave iv is a more shallow 0.27 single or double zigzag (it will subdivide either way). There is very good alternation between subminuette waves ii and iv.
To see this downwards movement as a three has slightly better Fibonacci ratios and slightly better alternation than seeing it as a five.
Second Daily Bull Wave Count
This bull wave count sees minor wave 1 a short brief impulse and minor wave 2 now an incomplete expanded flat correction. Within minor wave 2, minute wave c has not yet managed to move below the end of minute wave a at 1,178.59. It is highly likely to move at least below this point to avoid a truncation and a very rare running flat. At 1,165 minute wave c would reach 1.618 the length of minute wave a.
After completion of minor wave 2, then a new high above 1,142.82 would leave this as the only bull wave count. It requires a new high above 1,232.49 to eliminate a bearish alternate and for full confidence in the targets.
Second Hourly Bull Wave Count
This last wave down may also fit as a five. Minuette wave (ii) was a shallow 0.34 expanded flat and minuette wave (iv) was a shallow 0.33 regular barrier triangle. There is alternation in structure, but not in depth.
There is no Fibonacci ratio between minuette waves (i) and (iii). At 1,165 minuette wave (v) would reach equality in length with minuette wave (i). As this is also exactly where minute wave c would reach 1.618 the length of minute wave a, this target has a good probability.
Minor wave 2 may not move below the start of minor wave 1 at 1,142.82.
In the short term, subminuette wave ii may not move beyond the start of subminuette wave i above 1,191.71. In the short term, if price moves up strongly from here without first making a new low below 1,178.59, then minor wave 2 may be complete but only as a very rare running flat. If that happens, this wave count would have an exceptionally low probability due to the rarity of running flats, but it would still be valid.
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 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.
This is now the only remaining bear wave count. It sees minor waves 1 and 2 complete. The first wave down within minor wave 1 is now also likely to be complete and a smaller second wave correction for minute wave ii should unfold upwards. If it breaches the first maroon trend line, then it should find strong resistance at the aqua blue trend line.
Minute wave ii may not move beyond the start of minute wave i above 1,232.49.
Hourly Bear Wave Count
This bear wave count sees the downwards wave from the last high at 1,232 also as a five wave structure in the same way as the second bull wave count.
Minute wave ii may correct to either the 0.382 or 0.618 Fibonacci ratios. It should show on the daily chart as at least one green candlestick or doji.
ADX remains below 15 and continues to slowly decline. The market is still very much range bound. Short swings and low volatility should be expected. I cannot stress enough (as I have been over these last few weeks) that trading range bound markets is best left to experienced traders because it involves higher risk than trading a trending market. If members insist on trading within a clearly range bound market, it is vital that good money management and careful placement of stops is practiced. There is a greater risk of loss in this market.
The approach outlined here uses fast Stochastics as an oscillator to indicate overbought and oversold, in conjunction with horizontal trend lines because they are working nicely for this particular consolidation period. The unexpected downwards swing of Wednesday has again bought price back down to almost touch the lower outer aqua blue horizontal line.
This trend line is long held, not only shallow but horizontal, and repeatedly tested. It is highly technically significant. The probability of another upwards swing from here is high. It is possible that this trend line could be overshot before the upwards swing begins, which has happened twice before during this trading range.
This approach now expects it is very likely an upwards swing will unfold and will end when price again finds resistance at one of the two upper trend lines and when Stochastics is again overbought.
This analysis is published about 05:54 p.m. EST.