The third hourly Elliott wave count is confirmed by a green daily candlestick.
Summary: A fourth wave correction has most likely arrived. It may continue for at least another two days to last a total Fibonacci three days. If it does not end in three days total, then the next Fibonacci numbers in the sequence of five and eight would be expected for the duration of this bounce. Targets are either the 0.236 Fibonacci ratio at 1,108 or 0.382 Fibonacci ratio at 1,122. If it takes long enough, it may find resistance at the upper edge of the Elliott channel drawn on both daily and hourly charts.
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New updates to this analysis are in bold.
BEAR ELLIOTT WAVE COUNT
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). Minuette wave (iv) may find resistance at the upper edge of the channel.
Minuette wave (iv) may not move into minuette wave (i) price territory above 1,167.49.
The green candlestick on the daily chart for Monday’s session confirms the arrival of minuette wave (iv). I have just the one hourly wave count today. It follows on directly from the last wave count labelled “third”.
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. It is also possible (but even less likely) that it may last a Fibonacci eight days. This may be expected if it unfolds as a time consuming triangle.
At this stage, it looks like a five up and a three down is completed within minuette wave (iv).
If minuette wave (iv) is unfolding as a zigzag, then this may be micro waves 1 and 2 within a five wave impulse up for subminuette wave a.
If minuette wave (iv) is unfolding as a triangle, then this may be micro waves A and B within a zigzag up for subminuette wave a.
The labelling within this fourth wave correction will change because there are multiple structural options still open for this fourth wave correction as it unfolds. It is impossible at the start to know which structure will unfold, except only that a zigzag and triangle are more likely and a flat correction is least likely.
Minuette wave (v) downwards is expected to be very strong after minuette wave (iv) is complete. Gold typically exhibits swift strong fifth waves to end its third waves. At the daily chart level, downwards momentum for minute wave iii has yet to show an increase beyond that seen for minute wave i. The strongest downwards movement of this big third wave is still ahead and should now be fast approaching. Expect any further surprises to be to the downside.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Daily: A decline in volume and range for Monday’s green candlestick looks corrective. This fits the Elliott wave count.
ADX still indicates a downwards trend is in place. ATR somewhat agrees: for recent movement higher lows and higher highs for ATR overall indicate an expanding range indicative of a trending market.
On Balance Volume may assist to indicate when the correction will end. If OBV comes up to touch the new green trend line, then at that time the correction may be complete. OBV should find resistance at that line.
This analysis is published about 08:10 p.m. EST.