The trend was expected to be down.

Price continued lower.

Summary: Expect surprises to be to the downside as the middle of a big third wave may be approaching. Short term a new high above 1,114.45 and / or a green daily candlestick on either of Gold or Silver will indicate a correction against the trend has arrived. The upcoming correction may last about three days and possibly longer. The trend is down. Expect that the trend remains the same until proven otherwise. The target for a third wave to end is at 1,080.

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New updates to this analysis are in bold.

BEAR ELLIOTT WAVE COUNT

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Gold has been in a bear market since September 2011. There has not yet been confirmation of a change from bear to bull, and so at this stage any bull wave count would be trying to pick a low which is not advised. Price remains below the 200 day moving average and below the final bear market trend line (copied over from the weekly chart). The bear market should be expected to be intact until we have technical confirmation of a big trend change.

The final line of resistance (bright aqua blue line copied over from weekly charts) is only overshot and not so far properly breached. While this line is not breached the bear wave count will remain possible. Simple is best, and the simplest method to confirm a trend change is a trend line.

Minute wave ii is a complete double zigzag and deep at 0.75 the length of minute wave i. It has breached the dark blue base channel drawn about minor waves 1 and 2, one degree higher. When a lower degree second wave correction does this it reduces the probability of the wave count but does not invalidate it. Base channels most often work to show where following corrections find support or resistance, but not always.

At 932 minute wave iii would reach 1.618 the length of minute wave i.

Gold often exhibits swift strong fifth waves, particularly its fifth waves within its third waves. When price moves towards subminuette wave v of minuette wave (iii) it may be explosive. For this wave count look out for surprises to be to the downside.

At 1,080 minuette wave (iii) would reach 4.236 the length of minuette wave (i).

Draw a channel about this downwards movement using Elliott’s first technique: draw the first trend line from the end of minuette wave (i) to the last low which may be minuette wave (iii), then place a parallel copy on the high of minuette wave (ii). Keep redrawing the channel as price moves lower. When minuette wave (iv) arrives, it may find resistance at the upper edge of the channel.

Today I have three hourly wave counts. The first two wave counts expect downwards movement to continue for Monday. The third wave count looks at the possibility that a fourth wave correction may begin Monday. These wave counts are presented in the order they were developed, not in order of preference or probability.

FIRST HOURLY CHART

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Minuette wave (iii) may be close to completion needing only a final fifth wave down to end it. Sideways movement at the end of Friday’s session does look like it may be a very small shallow triangle. If the triangle holds, then a short fifth wave down may follow to complete the impulse for minuette wave (iii). Gold’s fifth waves out of its fourth wave triangles can be surprisingly short and brief.

Ratios within subminuette wave i are: micro wave 3 is 0.97 short of equality in length with micro wave 1, and micro wave 5 has no Fibonacci ratio to either of micro waves 1 or 4. There is good alternation between the shallow zigzag of micro wave 2 and the more shallow flat correction of micro wave 4. Micro wave 3 is stronger than micro wave 1, and micro wave 5 is strongest. This looks like a typical impulse for gold.

At 1,080 minuette wave (iii) would reach 4.236 the length of minuette wave (i).

The invalidation point is at 1,114.45 while subminuette wave iv is incomplete. Subminuette wave iv may not move into subminuette wave i price territory. As soon as subminuette wave iv may be complete and a new low may be submiuette wave v the invalidation point no longer applies.

SECOND HOURLY CHART

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This wave count follows on directly from yesterday’s second wave count. Minuette wave (iv) may have completed as a running contracting triangle, which may have been over much more quickly than expected. Sometimes within Gold’s third wave impulses the fourth wave is more brief and shallow than usual, from the strong downwards pull of a strong fifth wave. This wave count expects explosive downwards movement to unfold towards the target.

At 932 minute wave iii would reach 1.618 the length of minute wave i.

Ratios within minuette wave (iii) are: subminuette wave iii is 1.3 short of 1.618 the length of subminuette wave i, and subminuette wave v has no Fibonacci ratio to either of subminuette waves i or iii. There is little alternation between subminuette waves ii and iv: subminuette wave ii is a shallow 0.34 zigzag with a long A wave and short C wave and subminuette wave iv is a more shallow 0.13 zigzag with a short A wave and a long C wave.

Although there is not perfect alternation between subminuette waves ii and iv (the biggest problem with this wave count), seeing the correction labelled subminuette wave iv as a fourth wave and not a second wave (as the first wave count does) makes more sense.

The correction labelled minuette wave (iv) fits perfectly as a running contracting triangle. It cannot be a second wave because a second wave may not solely subdivide as a triangle.

THIRD HOURLY CHART

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Ratios within minuette wave (iii) are: there is no Fibonacci ratio between subminuette waves i and iii, and subminuette wave v is 2.30 longer than 0.382 the length of subminuette wave iii. Subminuette wave ii is a shallow 0.34 zigzag. Subminuette wave iv exhibits perfect alternation as a more shallow 0.05 running contracting triangle.

Minuette wave (ii) was a deep 0.65 expanded flat lasting six days. Minuette wave (iv) may be shallow, most likely ending at either the 0.236 or 0.382 Fibonacci ratios. It would most likely be a zigzag or triangle. It may be quicker than minuette wave (ii) due to the strong downwards pull of minuette wave (v) to come, and may last most likely a Fibonacci three days and possibly (less likely) a Fibonacci five.

TECHNICAL ANALYSIS

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Daily: Downwards movement for Friday shows a reasonable increase in volume and RSI is just oversold. Downwards movement may be interrupted here or very soon, within another two days at the most possibly.

This regular technical analysis supports the Elliott wave count. The trend is down and a correction against the trend is indicated to begin here or very soon.

This analysis is published about 07:39 p.m. EST.