Yesterday’s analysis expected a new high above 1,112.19 and an upwards breakout, which is exactly what has happened.
Summary: The target for both bull and bear wave counts short term is now 1,135. Price will be touching the cyan trend line when it gets there. How price behaves at that line will indicate which wave count, bull or bear, is correct. If that line is breached, then expect price to continue higher to the next target at 1,158. If price turns down strongly from there, then Gold may be seeing a trend change to make new lows. For now the trend is up.
New updates to this analysis are in bold.
Last published weekly charts with the bigger picture are here.
MAIN 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, 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 cyan trend line. The bear market should be expected to be intact until we have technical confirmation of a big trend change.
That technical confirmation would come with a breach of the upper cyan trend line by at least one full daily candlestick above and not touching the line. A new high above 1,191.37 would provide full and final price confirmation.
The final line of resistance (cyan line copied over from weekly charts) is only overshot and not so far properly breached. Simple is best, and the simplest method to confirm a trend change is a trend line.
Minute wave ii is a complete zigzag and deep at 0.73 the length of minute wave i.
At 941 minute wave iii would reach 1.618 the length of minute wave i.
Minuette wave (i) is complete.
Minuette wave (ii) looks like a fairly typical expanded flat correction which may end about the 0.618 Fibonacci ratio at 1,135.
Subminuette wave c may be unfolding as an ending expanding diagonal. Ending diagonals require all subwaves to subdivide as zigzags. No second wave correction may move beyond the start of its first wave at 1,082.74 within submicro wave (C).
The diagonal must be expanding because micro wave 3 is longer than micro wave 1, and micro wave 4 is longer than micro wave 2. The trend lines diverge. Micro wave 5 must be longer than micro wave 3, so it must end above 1,125.13.
There is still the possibility that minuette wave (ii) could be labelled as complete at the last high. If it was over, then the only structure I can see which would fit is a double combination. But double combinations are sideways structures; they should not have a slope against the trend one degree higher. This correction has a clear slope. For that reason I still do not want to publish this idea because the probability is too low. I will only publish it if price breaks below 1,071.36.
How price behaves when it comes up to touch the cyan trend line will indicate which wave count is correct. For both some resistance should be expected at that line. If the line is properly breached, then this main bearish wave count would reduce in probability.
Micro wave 5 upwards is underway and must subdivide as a zigzag.
The diagonal is expanding, so micro wave 5 must be longer than micro wave 3. Micro wave 5 would reach equality with micro wave 3 at 1,125.13. It must end above this point.
The target will remain the 0.618 Fibonacci ratio at 1,135. The cyan line, the final bear market trend line on the daily chart, should provide strong resistance for this wave count.
Submicro waves (A) and (B) are complete within micro wave 5. Submicro wave (C) is underway and must subdivide as a five wave structure.
Minuscule waves 1 and 2 are complete within submicro wave (C). Minuscule wave 3 is most likely incomplete. At 1,135 minuscule wave 3 would reach 1.618 the length of minuscule wave 1. This target expects that minuscule wave 5 would be short and move only sightly above the end of minuscule wave 3.
Nano wave iv is underway within minuscule wave 3. It may find support at the lower edge of the brown channel. It may not move into nano wave i price territory below 1,102.55.
ALTERNATE BULL WAVE COUNT
This was published here as a second alternate wave count. I will use it as the only regular alternate bull wave count because it is the only bull wave count to meet all Elliott wave rules.
I want to remind members that last time Gold saw a reasonable upwards movement from 24th July, 2015, to 15th October, 2015, there were many who expected that rise meant the bear market had ended and a new bull market had begun. It turned out that idea was premature: price turned around and made new lows. On 21st August I developed three bullish wave counts, partly in response to a demand from members, and one by one they have all been eliminated.
Now, again, price rises and there is a demand for bullish wave counts.
It is my strong view that this is premature. I will publish this wave count with that strong caveat.
Eventually the market will change from bear to bull, and when that change is confirmed that is the time to have confidence in a bull wave count. That time is not now.
Price remains below the 200 day moving average. Price has made a series of lower highs and lower lows down to the last recent low. There is not a clear five up on the daily chart. Price remains below the bear market trend line. While price remains below that line this wave count will be an alternate and comes with a strong warning that it is premature.
Downwards movement from the all time high for this bull wave count is seen as a big double zigzag which would most likely be complete at super cycle degree for an A wave.
When an A wave subdivides as a three, then the larger structure may be either a flat or triangle. The B wave may make a new price extreme beyond the start of the A wave within flats and triangles. Here, super cycle wave (b) may move above 1,920.18 as in an expanded flat or running triangle.
When the first move of a larger correction subdivides as a multiple (w-x-y), then a combination may be eliminated. Combinations may not have multiples within multiples, because that would increase the number of corrective structures within a multiple beyond three and violate the rule.
A new wave up at super cycle degree must begin with a clear five up on the daily chart (and probably the weekly as well). So far only minor waves 1 and 2 are complete. At 1,227 minor wave 3 would reach 4.236 the length of minor wave 1.
Minute waves i and ii are complete within minor wave 3. The acceleration channel is not working, so a more conservative base channel is drawn about these two waves. Copy it over to the hourly chart. A lower degree second wave correction for minuette wave (ii) should not breach a base channel drawn about a first and second wave one or more degrees higher.
The daily chart is on a semi-log scale and the hourly chart is on an arithmetic scale. This means channels sit slightly differently between these charts. The base channel has been breached now by upwards movement on both charts. The upper edge should now provide support.
This wave count still needs further upwards movement, micro wave 3 is an incomplete impulse. When subminuette wave iii is compete, then the following correction for subminuette wave iv may not move into subminuette wave i price territory below 1,095.12.
Both hourly charts are labelled in the same way, but this alternate has all labelling moved up two degrees.
Micro wave 3 may be incomplete.
Submicro wave (3) may have just ended within micro wave 3. It would be 2.19 longer than 2.618 the length of submicro wave (1).
Ratios within submicro wave (3) are: minuscule wave 3 is 0.83 short of equality in length with minuscule wave 1, and minuscule wave 5 is 0.47 short of equality in length with minuscule wave 3.
The light blue channel is drawn about the middle of the third wave using Elliott’s first technique, and it is a perfect fit. Submicro wave (4) should find support at the lower edge of this channel.
Because this labelling of the middle of this third wave has good Fibonacci ratios and it fits neatly within an Elliott channel, it is very likely that this labelling is correct.
When micro waves 3 and 4 are complete, then a target may be calculated for micro wave 5 upwards to complete the impulse of subminuette wave iii.
Micro wave 2 shows up on the daily chart as one green doji candlestick. Micro wave 4 when it arrives may also show up on the daily chart. It should be expected to be shallow against micro wave 3 (the 0.236 or 0.382 Fibonacci ratios would be favoured) and it may last one to two days.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price has broken out of the sideways consolidation zone upwards on a day with an increase in volume. This adds confidence to the Elliott wave counts.
As price rises volume increases supporting the rise in price.
ADX continues to indicate there is an upwards trend. ATR disagrees as it has been declining; it is flat today. On balance the trend indication from ADX should be given more weight today. If there is an upwards trend, then ATR should be expected to soon show an increase.
On Balance Volume is moving away upwards from the peach line which provided support.
RSI is not yet overbought. There is still room for price to rise.
I am removing Stochastics today. It should not be used in a trending market.
The 9 day EMA should be used instead. It is providing support along the way up.
This analysis is published @ 08:54 p.m. EST.