Upwards movement to 1,118 – 1,123 was expected. This is what happened, but only after a whipsaw took out the invalidation points on the hourly chart necessitating an updated short term chart for the hourly structure.
I have two wave counts for you today to consider all possibilities.
Summary: This fourth wave correction is again most likely over, but would not be confirmed until there is a new low below 1,082.77. If this comes with a red daily candlestick and increased volume, then a downwards breakout would finally be confirmed. A new high above 1,119.56, at this stage, would be reasonably bullish; should that happen, then the target for upwards movement to end would be 1,135, but this has a lower probability.
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Changes to last analysis are bold.
MAIN ELLIOTT WAVE COUNT
Cycle wave a is an incomplete impulse.
Within primary wave 5, the daily chart focuses on the middle of intermediate wave (3). Within intermediate wave (3), minor wave 3 now shows a slight increase in momentum beyond that seen for the end of minor wave 1 at the left of the chart. Third waves for Gold usually have clearly stronger momentum than its first waves, so I still expect to see a further increase in downwards momentum. The strongest downwards movement is still ahead of us, and now it may be expected to show up within the next fifth wave down of minute wave v to end minor wave 3. Gold often exhibits very strong fifth waves, and when it does this they usually turn up to end its third wave impulses.
It is possible (just, with an unusual looking expanded flat within it for a second wave) to see minute wave iii as over. The duration of this current correction indicates that despite the problem within its subdivisions minute wave iii must have been over and this current correction is minute wave iv.
Minute wave ii was a deep 0.618 single zigzag lasting nine days. Minute wave iv is a shallow 0.359 double combination which provides perfect alternation.
Within minute wave v, no second wave correction may move beyond its start above 1,119.56.
Add a second channel to the daily chart. Draw a channel about minor wave 3 using Elliott’s second technique: draw the first trend line from the ends of minute waves ii to iv, then place a parallel copy on the end of minute wave iii. The upper edge of this channel now perfectly shows where corrections have been finding resistance, and so this channel finally looks right. Minute wave v may end about the lower edge of this channel.
The blue channel is a base channel drawn about minor waves 1 and 2: draw the first trend line from the start of minor wave 1 (off to the left of the chart at the high of 1,308) to the end of minor wave 2, then place a parallel copy on the end of minor wave 1. The lower trend line perfectly shows where minute wave iii found support. Minor wave 3 should have the power to break through support at the lower trend line; when its fifth wave arrives, then it should be strong enough to do that.
There is no Fibonacci ratio between minute waves i and iii, which makes it very likely that minute wave v will exhibit a Fibonacci ratio to either of minute waves i or iii. At 986 minute wave v would reach equality in length with minute wave iii. This target expects minute wave v will be very swift and strong (once it is underway, not necessarily right at the start) particularly toward the end of it. The strongest piece of downwards movement may be the fifth wave of the fifth wave: minuette wave (v) of minute wave v to end minor wave 3.
Along the way down to the final target for primary wave 5 at 954, there will be two more big fourth wave corrections: one for minor wave 4 and another for intermediate wave (4). They may be expected to be less time consuming than their counterpart second wave corrections; they may also be expected to be shallow, but they will both still likely be multi week corrections (at least two weeks in the case of minor wave 4 and longer for intermediate wave (4) ).
At 957 primary wave 5 would reach equality in length with primary wave 1.
Minute wave iv fits as a double combination, providing alternation with the zigzag of minute wave ii. The first structure in the double was a simple zigzag, the double is joined by a “three” in the opposite direction, a nine wave triangle, labelled minuette wave (x). The second structure in the double is now a completed expanded flat correction labelled minuette wave (y).
Double combinations are very common structures.
Within minuette wave (y), subminuette waves a and b both subdivide well as threes as they must for a flat. Subminuette wave b is a 111% correction of subminuette wave a, so this is an expanded flat (their B waves are a minimum 110% of the A wave). Subminuette wave c is 1.5 longer than 2.618 the length of subminuette wave a.
Subminuette wave c is an ending expanding diagonal. C waves may subdivide as either impulses or diagonals. Within an ending diagonal, all the sub waves must be zigzags and the fourth wave must overlap first wave price territory as this one does. The common depth for second and fourth waves within diagonals is between 0.66 to 0.81 the prior wave. Here micro wave 2 is 0.58 of micro wave 1 and micro wave 4 is 0.78 of micro wave 3. This diagonal looks reasonably typical and most importantly the subdivisions fit.
An expanding diagonal must have the third wave longer than the first, the fifth wave longer than the third, the fourth wave longer than the second, and the trend lines must diverge. These rules here are met.
The final fifth wave overshoots the 1-3 trend line, which makes it extremely likely that the structure is complete.
I have spent considerable time on the five and one minute charts today to determine the structure of the first wave down from the end of minute wave iv. It must subdivide as a five. It could be forced as a leading diagonal, but that doesn’t look right. I have concluded it is either a corrective structure hence the alternate wave count below, or it may also just fit as an impulse on the one minute chart.
It looks like a triangle is unfolding as this analysis is prepared; this may be a B wave within a second wave zigzag for micro wave 2.
Micro wave 2 may not move beyond the start of micro wave 1 above 1,119.56.
Draw a small channel about micro wave 2. It may end when price comes up to touch the upper edge of that channel. At 1,115 submicro wave (C) would reach equality in length with submicro wave (A).
A new low below 1,082.77 would finally confirm a downwards breakout is underway.
ALTERNATE ELLIOTT WAVE COUNT
Because I am concerned with the volume profile – this rise in price for the last four days is supported by rising volume – I want to consider all possibilities.
This wave count is different from the main wave count only in the structure of minute wave iv. The trend remains down at minor, intermediate and primary degree and the final target remains the same.
What if minute wave iv is not over? What other structure could it be?
Minute wave iv does not fit as a zigzag because the first wave up labelled minuette wave (a) is a three, not a five. A zigzag would also not provide alternation with the zigzag of minute wave ii, so a zigzag is very unlikely.
It does fit as a flat correction, which subdivides 3-3-5, and minuette wave (b) is over the minimum of 90% the length of minuette wave (a) at 96%. Both minuette waves (a) and (b) subdivide easily as threes.
Minuette wave (c) may only subdivide as a five, either an ending diagonal or an impulse. So far it looks like it may be more likely to be an impulse.
At 1,135 minuette wave (c) would reach 1.618 the length of minuette wave (a). If minuette wave (c) upwards shows declining volume as it ends, then the problem I have today with rising volume for the first part of it would be resolved.
At the daily chart level, this wave count does not look very good: minuette wave (c) is too slow and much longer in duration than minuette wave (a). At the hourly chart level, the wave count looks worse.
It is not possible to see micro wave 3 as complete; there is too much overlapping for an impulse to fit, and a third wave may only subdivide as an impulse.
There are now three overlapping first and second wave corrections (with submicro wave (2) still to complete lower) within the impulse of minuette wave (c).
Submicro wave (1) will only fit as a leading expanding diagonal. While this is not a rare structure, it is not very common either which reduces the probability of this wave count.
Submicro wave (2) should be a very deep correction because second waves following leading diagonals in first wave positions are usually very deep. It may not move beyond the start of submicro wave (1) below 1,082.77. It may be unfolding as a double zigzag, although minuscule wave W does not fit very well as a single zigzag (it fits better as a double, but it is invalid to label a multiple within a multiple).
Invalidation of this alternate wave count would provide confidence in the main wave count.
ADX is above 45 and now clearly declining. This indicates the market is overextended, and a trend turning point should be expected. I expect that was the last low. ADX does tend to be a lagging indicator. Price or indicator patterns should be used.
This pattern no longer looks like a typical flag, and now entering the third week it is too long in duration. It looks overall like a correction against a downwards trend, but this is no longer as clear. So far it does fit within a parallel channel but the upper trend line has not been tested enough for a classic pattern of a channel or a flag to be indicated. If the upper trend line is breached, then an upwards breakout may be indicated.
The bright aqua blue trend line is added. This may be providing some resistance along with the upper edge of the small parallel channel.
On Balance Volume has come up to almost touch its long held lilac trend line. This line may allow for a very slight new high until it is more clearly touched, but it indicates an end to upwards movement may be about here. This trend line is longer held and more tested than the trend lines for price, so it is more technically significant.
RSI is well above oversold, back into normal range. There is plenty of room for the market to move either up or down.
Overall, price and OBV indicate resistance. During recent sideways movement, it is still a downwards day which shows clearly stronger volume. This overall indicates a downwards breakout is still more likely than upwards, but the rise in price for the last four days is making this message less clear. The parallel channel about this sideways / upwards drift should be used to indicate what direction price will break out before any confidence may be had in the next direction.
This analysis is published about 07:00 p.m. EST.