A small inside day fits both Elliott wave counts at the hourly chart level. The Elliott wave counts remain the same.
Summary: Structure indicates it is still more likely we shall see a little more downwards movement before this wave is over; the target is now calculated at two degrees to a small zone of 1,157 – 1,154. However, the green candlestick for Monday’s session is slightly concerning, although it does have lower volume than prior down days so it may be a correction against this trend. A new high above 1,179.60 would indicate the downwards wave is over and the next wave up is underway. A new low below 1,162.80 would indicate the final fifth wave is incomplete and downwards movement should continue towards the target zone.
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. 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) 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.
This bull wave count sees minor wave 1 a short brief impulse and minor wave 2 now an expanded flat correction. Within minor wave 2, minute wave c has now moved below the end of minute wave a at 1,178.59 avoiding a truncation and a very rare running flat.
It is possible that minor wave 2 is over here. If it is, then 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. If minor wave 2 moves lower, this target must also move correspondingly lower.
Minor wave 2 may not move beyond the start of minor wave 1 below 1,142.82.
After completion of minor wave 2, then a new high above 1,232.49 would eliminate the bear wave count and provide full confidence in the targets.
As for last analysis, both hourly charts work for the bull and bear wave counts in exactly the same way. This first hourly chart looks again at the possibility that this downwards movement is over and the next wave up has begun.
On the five minute chart, I cannot see the wave up labelled subminuette wave i as a five, but it does fits nicely as a three with a running contracting triangle for micro wave B.
The following wave down for subminuette wave ii also looks like a three on the hourly chart.
If downwards movement is over now, then a leading diagonal may be unfolding in a first wave position for minuette wave (i). For the bear count this would be minuette wave (a).
Leading diagonals are not rare but they are not very common either. Any wave count which sees a three in the expected direction of trend and so reverts to a diagonal is often suspect in my experience. This is the main reason why today I consider it more likely that we shall see yet a little more downwards movement as per the hourly chart for the bear count below.
Within a leading diagonal, sub waves 1, 3 and 5 are most commonly zigzags and sub waves 2 and 4 must be zigzags. The most common depth for waves 2 and 4 is between 0.66 to 0.81 the prior wave. Here subminuette wave ii is just 0.54 of subminuette wave i, which is shallower than normal.
This wave count absolutely requires confirmation before confidence may be had in a trend change. A new high above 1,179.60 would provide price confirmation. A breach of the best fit channel would provide trend channel confirmation, which may come second.
Subminuette wave ii may not move beyond the start of subminuette wave i below 1,162.80.
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.
This hourly chart works in the same way also for the bull wave count. For both bull and bear wave counts it remains likely that we shall yet see more downwards movement for Tuesday.
If minuette wave (v) is not over, then at 1,157 it would reach equality in length with minuette wave (iii). Both minuette waves (iii) and (v) would be extended.
At 1,154 subminuette wave v would reach equality in length with subminuette wave iii. This gives a $3 target zone calculated at two wave degrees.
Subminutte wave ii was a deep 0.57 combination. Subminuette wave iv may be complete now as a deep 0.65 single zigzag. There is reasonable alternation between them.
It is also possible that subminuette wave iv may be continuing further sideways as a contracting triangle. This idea would expect sideways movement in an ever decreasing range yet for several hours, maybe even another whole day, before downwards movement resumes. This would introduce a problem of gross disproportion and so it is more likely that subminuette wave iv is over.
Subminuette wave iv may not move into subminuette wave i price territory above 1,179.60. At any stage a new high above 1,179.60 would indicate that minute wave i is over and minute wave ii would be underway for this bear wave count. For the bull wave count it indicates a third wave up would be underway.
ADX is turning up, but is still below 15 at 14.66 for Monday. This indicates there is still no clear trend. For a trend to be indicated ADX must be at 15 or greater, and this indicator is clearer if ADX is at 20 or higher and rising.
The long lower wick of Friday was a slightly bullish indicator, and the small green candlestick fits this picture. This TA approach uses horizontal lines of support and resistance, with fast Stochastics to indicate overbought and oversold. This approach indicates an upwards swing has begun from here.
Price seems to be finding resistance at the lower aqua blue trend line which previously provided support. It is very important to wait for this trend line to be breached by upwards movement before having any confidence that an upwards swing is underway. While price remains below that trend line ADX should be watched carefully; if Tuesday’s session forces ADX to rise to 15 or greater than a downwards trend would be indicated and the start of a new bear market could be underway.
Volume continues to indicate a downwards breakout is more likely than an upwards breakout. Since price entered this sideways consolidation phase back on 27th March, it is downwards days and downwards weeks which have the strongest volume which is significant. A bearish breakout may be unfolding, but is still unconfirmed. Caution is advised until the picture becomes clearer.
For the lower aqua blue trend line to indicate a bear breakout it should be breached by a CLOSE of 3% or more of market value. That price point would be at 1,143.23.
This analysis is published about 06:39 p.m. EST.