Last analysis expected upwards movement to continue, which it has, but the target at 1,141 was inadequate.
Price remains below the invalidation point. There still has been zero confirmation of an end to this upwards movement.
The wave count is changed.
Summary: At the weekly chart level, primary wave 5 may not be seen as a complete structure as either an impulse or ending diagonal. The wave count still sees the longer term trend as down, and this upwards movement as a correction against the trend which may still be incomplete. The daily wave count is changed to see this upwards movement as minute wave ii not iv, and so the invalidation point is changed to 1,205.89. A target for it to end is at 1,164 – 1,168. At this stage, upwards movement may be expected to continue while price remains above the channel on the hourly chart. Points for confirmation are provided with analysis of the hourly chart below. Confirmation is essential before any confidence may be had that this upwards movement is over.
To see weekly charts and analysis click here.
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. That may now show up for minute wave iii, the middle of intermediate wave (3). Within minute wave iii, it will most likely be the fifth wave which exhibits the strongest momentum.
Today the wave count is changed. Yesterday’s main wave count is now an alternate. This upwards movement may be minute wave ii. Of all the ideas I have tried today, at this stage, this one has the best look and the best proportion. The blue channel is a base channel about minor waves 1 and 2. Minute wave ii, a lower degree second wave, should not breach the base channel drawn about a first and second wave one or more degrees higher.
Ratios within minute wave i are: minuette wave (iii) has no adequate Fibonacci ratio to minuette wave (i) and minuette wave (v) is just 0.97 longer than 1.618 the length of minuette wave (iii).
When minute wave iii arrives, then it should have the power to break below support at the lower edge of the base channel.
Minute wave ii may not move beyond the start of minute wave i above 1,205.89. A new high above 1,162.80 would invalidate the alternate (which was the main wave count up until yesterday) and provide some confirmation of this wave count.
Minute wave ii is a flat correction. Minuette wave (c) must be a five wave structure; it is unfolding as an impulse.
At 957 primary wave 5 would reach equality in length with primary wave 1.
The structure and degree of labelling for the hourly chart remains exactly the same as yesterday. The difference is this upwards movement is seen as a second wave rather than a fourth wave correction, so the invalidation point is higher.
Within minuette wave (c), there is no Fibonacci ratio between subminuette waves i and iii, which makes it more likely that subminuette wave v will exhibit a Fibonacci ratio to either or i or iii. At 1,168 subminuette wave v would reach 1.618 the length of subminuette wave i. This target may now bring price up to touch the upper edge of the blue base channel on the daily chart.
Within subminuette wave v, micro wave 3 is just 0.46 short of 2.618 the length of micro wave 1. At 1,164 micro wave 5 would reach equality in length with micro wave 3. This gives a $4 target zone calculated at two wave degrees.
Confirmation that minute wave ii is over will come with the following. Depending upon your risk appetite, you may wish to wait for one or more of the below points to be met before you have confidence that the downwards trend has resumed. Picking a high is not advised; confirmation at some level is wise:
1. A breach of the best fit violet channel on this hourly chart by downwards (not sideways) movement.
2. A clear five wave structure down at the hourly chart level (no lower time frame here should be used).
3. A new low below 1,120.27. At that stage, downwards movement could not be a fourth wave correction within subminuette wave v, so subminuette wave v would have to be over.
4. A red daily candlestick with increased volume.
While there is zero confirmation of any trend change, it should be expected that price will continue to rise.
FIRST ALTERNATE ELLIOTT WAVE COUNT
Up to yesterday this was the main wave count. It now looks wrong.
Minute wave ii was a deep 0.618 single zigzag. Minute wave iv is now also deep, close to the 0.618 Fibonacci ratio. There is no alternation in depth between these corrections, which reduces the probability of this wave count.
Minute wave ii lasted nine days. Minute wave iv is now in its 24th day. There is poor proportion between them further reducing the probability of this wave count.
Minute wave iv may not move into minute wave i price territory above 1,162.80.
The bigger picture for both wave counts remains the same.
SECOND ALTERNATE ELLIOTT WAVE COUNT
There are a couple of things at the weekly chart level to draw attention to, which I think should be base lines for any wave count for Gold.
Primary wave 2 was a deep 0.68 running flat lasting 52 weeks, three short of a Fibonacci 55. Although it is a rare running flat, the subdivisions are perfect and the truncation is small. It allows primary wave 1 to be an obvious impulse; seeing primary wave 1 as over anywhere else is highly problematic.
Primary wave 3 was 12.54 short of 1.618 the length of primary wave 1.
Primary wave 4 was a shallow 0.268 regular contracting triangle lasting 54 weeks, just one short of a Fibonacci 55. Within primary wave 4, the subdivisions are all perfect right down to the five minute chart level. There is perfect alternation between primary waves 2 and 4 and almost perfect proportion.
I do not want to consider a wave count which ignores these obvious structures and relationships.
This means that primary wave 5 begins at the end of the triangle. It is obvious that downwards movement from that point cannot be a complete five wave structure; it will fit neither as a complete impulse nor a diagonal.
The main wave count sees primary wave 5 subdividing as an impulse, the more likely structure. The other possibility is an ending diagonal. An ending diagonal requires all sub waves to be zigzags. This alternate looks at that possibility.
The problem is the zigzag of intermediate wave (2). That problem is outlined below.
This problem also would exist for any idea which sees this upwards wave as a part of an ending diagonal for primary wave 5, whether it begins as I have it labelled on the weekly chart above or if it begins earlier (and you lose the triangle for primary wave 4).
An ending diagonal must see all the sub waves as zigzags. The fourth wave must overlap first wave price territory.
This upwards movement does have a cursory look as a three wave zigzag. The problem is within minor wave A.
Minor wave A will not fit as a completed impulse, because there is too much overlapping. Within the contracting diagonal, minute wave i is 76.86 in length and minute wave iii is 78.46 in length. The third wave is longer than the first violating the rule for a third wave within a contracting diagonal (the rule states it should be shorter). This is an invalid wave count.
I do not wish to rewrite the rules as given in Frost and Prechter; if so, that way I would expect leads to something that is not Elliott wave. If we start to do that, then we may as well give up the whole exercise.
There is only one other possibility which could redeem this wave count. A double or triple zigzag may take the place of a single zigzag as per the rules in Frost and Prechter. If it is accepted that this can occur within a diagonal, then this upwards movement may be labelled as a triple zigzag, but they are very rare. In this instance, the second zigzag would not substantially move above the end of the first, and the second X wave is very deep overlapping back into the first zigzag.
This does not violate any rules, the subdivisions do fit, but it looks very wrong indeed. I have seen three very rare triple zigzags on Gold in the last several years, and they do not look like this. The purpose of repeated zigzags in a multiple is to deepen the correction when the first zigzag (and the second) does not move price deep enough. To achieve that purpose the X waves within multiple zigzags are shallow and the whole movement has a clear slope against the prevailing trend.
This possible triple zigzag does not fit the definition of how a triple zigzag should behave.
The main wave count sees this upwards wave as an ending expanding diagonal. The subdivisions are the same (all zigzags), but the look is right and it is a much more common structure. It must be accepted that any wave count with rare structures that don’t have the “right look” should not be considered over and above any wave count which has much more common structures and does have the right look.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Volume has increased again today, above the prior upwards day. This rise in price is supported by volume.
However, overall during this movement volume continues to decline (as shown by the sloping line on volume). This indicates that this movement is a consolidation and not a new trend.
ADX still does not indicate a new trend; it indicates the market is consolidating. However, ADX is a lagging indicator. Today it is flat, not declining. If the black ADX line turns up, then a new upwards trend would be indicated.
On Balance Volume has come up to touch its trend line. This may provide resistance.
RSI is getting closer to overbought but its not there yet. There is still some room for the price to move higher.
Fast Stochastics is overbought. But while price has made new highs, Stochastics is flat and not making new highs. There is a little bearish divergence there.
This analysis is published about 08:57 p.m. EST.