Upwards movement was expected for Monday.
Summary: Upwards movement may end tomorrow about 1,132. If it does not end there tomorrow, then the next expectation would be Wednesday to see a high at 1,142 – 1,144. Upwards movement may end at any stage as soon as a new high is seen above 1,126.86.
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Changes to last analysis are bold.
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 more shallow flat correction, which is still incomplete.
Minute wave iv may not move into minute wave i price territory above 1,162.80.
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. When minute wave iv is confirmed as complete, then a target for minute wave v down may be calculated. It is likely to be extended and very strong.
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.
Within the flat correction of minute wave iv, minuette waves (a) and (b) both subdivide as three wave structures, and minuette wave (b) is a 97% correction of minuette wave (a) meeting the minimum requirement of 90% for a B wave within a flat. Minuette wave (c) may only be a five wave structure, and at this stage, it looks like an incomplete impulse.
Subminuette wave ii was a time consuming deep 0.71 double combination. Subminuette wave iv may now be over as a quicker zigzag and more shallow at 0.33 of subminuette wave iii. There is perfect alternation between subminuette waves ii and iv.
Upwards movement for Monday subdivides nicely as a completed impulse. This may be micro wave 1. Ratios within micro wave 1 are: submicro wave (3) is 0.24 longer than 1.618 the length of submicro wave (1), and submicro wave (5) is 0.39 longer than equality in length with submicro wave (3).
Micro wave 2 may also be over as a deep 0.57 zigzag; it looks like a completed three wave structure. The risk today is that micro wave 2 may not be over: either submicro wave (C) is continuing further or micro wave 2 may continue sideways as a flat or combination, or lower as a double zigzag. Micro wave 2 may not move below 1,111.98.
At 1,132, subminuette wave v would be 0.618 the length of subminuette wave i and price would reach the first line of resistance on the technical analysis chart. If it does not end there, then the next target would be about 1,142 – 1,144 where subminuette wave v would be equal in length with subminuette wave i and price would reach the second line of resistance on the technical analysis chart.
If the correction for minute wave iv ends tomorrow or Wednesday, then it would total a Fibonacci twenty one sessions or twenty two which would be an acceptable variation.
Draw a base channel about micro waves 1 and 2. If micro wave 2 continues lower, then redraw the channel. Micro wave 3 may be strong enough to break above the upper edge of the channel, but it does not have to. Along the way up, corrections should find support at the lower edge of the channel.
ADX is below 45 and clearly declining. A correction is likely. This is what has been unfolding now for over two weeks; ADX does tend to be a lagging indicator. However, at this stage, what ADX clearly shows today is that this upwards movement is not a new trend.
On Balance Volume has breached its long held lilac trend line, which is now providing support. This expects some upwards movement. If the Elliott wave count is correct, then OBV will have to break below this lilac trend line again. On the way down, the lilac trend line may provide some support initiating a small bounce.
I have added two horizontal trend lines of resistance, which were previously support. The first is at 1,131 from that low on 7th November 2014. The second is at 1,142 from the lows at 1st December 2014 and 17th March 2015. If price breaks above 1,131, then the next line at 1,142 may show where upwards movement ends. 1,142 was tested four times, so it is highly technically significant.
RSI has returned well into normal range. There is plenty of room for the market to rise or fall.
The EMA is changed to a Fibonacci 55 days. This may also provide some resistance.
Overall, within this correction, it is upwards days which have stronger volume, which would indicate an upwards breakout is more likely than downwards. However, this disagrees with ADX, which indicates the market is consolidating and not in a new upwards trend. While these two indicators give opposite messages, the picture is unclear; caution is advised. Declining volume for five days in a row now suggests this movement is nearing an end.
The strongest piece of technical analysis on this chart is the horizontal lines of resistance, particularly 1,142. At this stage, it should be expected that price will respect that trend line.
Note: I am still searching for a reliable new data feed for Gold spot prices. I will use volume data from StockCharts to supplement this data from FXCM. Stockcharts volume data does not show high volume for 5th August (an upwards day), but it does show highest volume during this correction for the two upwards days of 11th and 12th August.
This analysis is published about 07:27 p.m. EST.