Upwards movement was expected for Tuesday.
Although price moved sideways to complete a small green doji, downwards movement during the session moved below the invalidation point on the hourly chart.
Summary: To call an end to subminuette wave iv yesterday was probably premature. Subminuette wave iv is now more likely to be over today. A final fifth wave up is still expected to unfold over the next 24 hours, and may take one to three days to complete. The first target is at 1,129; the second target is at 1,141. The market is consolidating; there is no clear trend. When this consolidation is complete, then I expect a downwards trend to resume in force. Price confirmation of a downwards breakout will be a new low below 1,105.18.
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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.
MAIN HOURLY ELLIOTT WAVE COUNT
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 combination. Subminuette wave iv may have continued lower yesterday as a double zigzag, and is now better in proportion to subminuette wave ii on the daily chart, and the structure of minuette wave (c) as a five wave impulse has a better look. If subminuette wave iv were to continue even further, then the invalidation point for that idea remains lower at 1,105.18. It may not move into subminuette wave i price territory.
The double zigzag has a slope against the prior trend, and looks reasonable at the hourly chart level.
At 1,129 subminuette wave v would reach 0.618 the length of submineutte wave i. If upwards movement keeps rising through the first target, or when price gets there the structure is incomplete, then the next target should be used. At 1,141 subminuette wave v would reach equality in length with subminuette wave i.
Within subminuette wave v, micro wave 2 may not move beyond the start of micro wave 1 below 1,109.65.
The channel about subminuette wave iv is a best fit. When price breaks above the upper trend line, then a third wave may show an increase in upwards momentum.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
I want to consider all possibilities. What if minute wave iv is over?
If it is over, then the final fifth wave within it would have to be truncated by 3.91. This truncation is substantial, and so substantially reduces the probability of this alternate wave count, maybe to as low as 10%.
A new low below 1,109.65 would be initial indication that this wave count may be correct, but before I have reasonable confidence it would require final confirmation below 1,105.18. A new low below 1,105.18 could not be a continuation of subminuette wave iv, so at that stage minuette wave (c) would have to be over.
Within the new downwards trend, micro wave 2 may not move beyond the start of micro wave 1 above 1,121.28. Invalidation of this alternate would provide further confidence in the main wave count.
At 989 minute wave v would reach equality in length with minute wave iii. This target expects an extended fifth wave, which should show a strong increase in downwards momentum either within its third wave or possibly its fifth wave. When the strongest part turns up, then it may be explosive.
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.
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.
Volume data from StockCharts.com is slightly different, and as it is more reliable than FXCM volume data this comment refers to StockCharts data. Volume for Tuesday was slightly higher, but still below the high volume of five and six days ago. Overall volume is still declining as this correction continues, which supports the idea that it is not necessarily a new trend but more likely a consolidation.
Stochastics has reached overbought, and is trying to return to normal. A downwards swing from here or very soon would be expected from Stochastics.
This analysis is published about 08:04 p.m. EST.