Downwards movement fits both Elliott wave counts, but with greatly reduced volume the main Elliott wave count is better supported.
Summary: The main wave count expects Gold is in a sideways consolidation which is incomplete. It may end with another three or six days of sideways movement. The alternate needs a five down to complete at the hourly chart level, and then a new low below 1,119.23 before any confidence may be had in it.
Changes to last analysis are bold.
To see weekly charts and the three different options for cycle wave b (main wave count) go here.
MAIN WAVE COUNT – DAILY
The bigger picture at super cycle degree is still bearish. A large zigzag is unfolding downwards. Along the way down, within the zigzag, cycle wave b must unfold as a corrective structure.
At this stage, there are three possible structures for cycle wave b: an expanded flat (50% likely), a running triangle (20% likely), or a combination (20% likely).
This daily chart works for all three ideas at the weekly chart level.
For all three ideas a five up should unfold at the daily chart level. This is so far incomplete.
Upwards movement is finding resistance at the upper edge of the blue channel and may continue to do so. Use that trend line for resistance, and if it is breached, then expect a throwback to find support there.
Minor wave 3 was 4.42 short of 2.618 the length of minor wave 1.
Minor wave 2 was a very deep double zigzag. Given the guideline of alternation minor wave 4 may be expected to be a shallow flat, combination or triangle. Minor wave 4 may now end again at the 0.382 Fibonacci ratio most likely.
Minor wave 2 lasted a Fibonacci three days. Combinations, flats and triangles are all longer lasting structures than zigzags, so minor wave 4 may likely total a Fibonacci five or eight days. So far it has lasted only two.
Minor wave 4 may not move into minor wave 1 price territory below 1,119.23 (this price point is taken from the hourly chart level).
Draw a channel about this upwards movement: draw the first trend line from the ends of minor waves 1 to 3, then place a parallel copy lower to contain all this movement. If minor wave 4 is time consuming enough, then it may find support finally at the lower edge of that channel.
MAIN HOURLY WAVE COUNT
Downwards movement from the last high labelled minor wave 3 so far subdivides best as a double zigzag. Because minor wave 2 also fits best as a double zigzag, it is highly unlikely that minor wave 4 is over here; there would be no alternation at all in structure between the two corrective waves.
This double zigzag may be minute wave a of a larger flat correction or triangle for minor wave 4, with both structures equally as likely. Although I am showing a very deep wave for minute wave b it does not have to be this deep.
If minor wave 4 is a flat correction, then within it minute wave b must retrace a minimum 90% of minute wave a at 1,165. Minute wave b may make a new high above minute wave a at 1,168.41 if minor wave 4 is to be an expanded flat, which is a very common structure.
If minor wave 4 is a triangle, then there is no minimum requirement for minute wave b to move upwards. Minor wave 4 may be a running triangle, so minute wave b may make a new high above minute wave a at 1,168.41.
This first idea expects choppy overlapping movement to continue for minor wave 4 probably for another two or six days in total.
MAIN HOURLY WAVE COUNT II
By moving the degree of labelling within minor wave 4 all up one degree, it is possible that it is an almost complete flat correction. It may end close to the 0.382 Fibonacci ratio at 1,131. This would provide perfect alternation with the deep double zigzag of minor wave 2.
Within the flat correction, minute wave c must be a five wave structure. Minuette wave (iv) may not move into minuette wave (i) price territory above 1,145.82.
If price manages to make a new low and remain below 1,145.82, then this wave count may be correct. That may see an earlier end to minor wave 4, which could be over in just four days total. A subsequent new high above 1,170.19 would invalidate the alternate hourly wave count and provide confidence in the main wave count.
ALTERNATE ELLIOTT WAVE COUNT
I would judge this alternate wave count to have about a 10% probability at this stage.
This wave count now sees a series of three overlapping first and second waves: intermediate waves (1) and (2), minor waves 1 and 2, and now minute waves i and ii.
The blue channel is drawn in the same way on both wave counts. The upper edge will be critical. Both wave counts expect some downwards movement from here to bounce down from resistance about the upper blue trend line. Here the blue channel is a base channel drawn about minor waves 1 and 2. A lower degree second wave correction for minute wave ii should not breach a base channel drawn about a first and second wave one or more degrees higher. If this blue line is breached by one full daily candlestick above it and not touching it, then this alternate wave count will substantially reduce in probability.
Minute wave ii may not move beyond the start of minute wave i above 1,232.49.
A new low below 1,119.23 in the short term would confirm this wave count. Full and final confirmation would come with a new low below 1,072.09.
If primary wave 5 reaches equality with primary wave 1, then it would end at 957.
ALTERNATE HOURLY WAVE COUNT
A third wave may only subdivide as an impulse, and the first wave within it must be a five wave structure, most likely a simple impulse also. So far there may be an incomplete impulse downwards. Subminuette wave iv may not move into subminuette wave i price territory above 1,145.82.
If price moves above 1,145.82 before making a new low to complete an impulse, then minuette wave (i) may be a leading diagonal. Within a leading diagonal, the first, third and fifth waves are most commonly zigzags. However, leading diagonals while not rare are not very common either. This would reduce the probability of this alternate further.
This downwards movement is now too deep and time consuming to be a continuation of minute wave ii. It should be the start of a third wave for this idea.
This wave count absolutely requires a new low below 1,119.23 before I would have confidence in it.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Concerns I had yesterday over the volume spike for a downwards day are now alleviated. Today’s stronger downwards move in price comes on lighter volume. Importantly, volume for Tuesday at 183,582 is lower than the prior upwards day two days ago which was 189,582. This fall in price for Tuesday is not supported by volume. Monday’s volume spike may have been a volume spike for the final high which sometimes occurs at the end of movements for commodities. The volume profile today supports the main wave count slightly more than the alternate.
ADX is again turning downwards. No clear trend again is indicated.
On Balance Volume has breached its short pink trend line. This is fairly bearish and supports the alternate wave count.
Stochastics has returned from overbought. There is some positive bullish divergence between Stochastics and price for the last two short swing lows. This supports the main wave count. This divergence indicates underlying strength for price.
Overall the regular technical analysis favours the main wave count, but with OBV providing a bearish indicator the picture is unclear.
This analysis is published about 06:20 p.m. EST.