Downwards movement breached the invalidation point on the main hourly Elliott wave chart but not the alternate.
Summary: There has been no technical confirmation of a trend change for Gold from bear to bull. The bear wave count now expects a big third wave down to begin, and confidence that it is underway would come with a new low below 1,071.36. The alternate bull wave count expects a third wave up is underway, and for confidence this wave count requires a breach of the final bear market trend line on the daily chart.
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 a complete ending contracting diagonal. The first hourly chart looks at a complete structure, and to consider all possibilities the second hourly chart below for the bear wave count looks at a possible incomplete structure.
If price continues higher, it should find resistance at the final bear market trend line. If that line is breached, it would indicate a trend change from bear to bull. At that stage, the bull wave count would be preferred.
MAIN BEAR HOURLY CHART
Micro wave 5 may be a complete five wave impulse.
There is no Fibonacci ratio between submicro waves (A) and (C).
There are no Fibonacci ratios between minuscule waves 1, 3 and 5 within submicro wave (C).
The red channel is a best fit about submicro wave (C). A breach of this channel is not sufficient to confirm a trend change in this instance because the second hourly bear chart below allows for this. For now the lower edge is providing support. If the channel is breached, then the lower edge may provide resistance for a throwback.
No second wave correction may move beyond the start of its first wave above 1,127.94 within minuette wave (iii).
At 989 minuette wave (iii) would reach equality in length with minuette wave (i). If this target is wrong, it may not be low enough.
A new low below 1,071.36 would invalidate the second hourly bear chart below and provide some confidence in a trend change.
ALTERNATE BEAR HOURLY CHART
What if my labelling of micro wave 5 for the main hourly bear chart is wrong and the structure is incomplete?
Micro wave 5 must subdivide as a zigzag. Within a zigzag, both waves A and C must be five wave structures.
Submicro wave (A) may be complete as a five wave impulse.
Ratios within submicro wave (A) are: minuscule wave 3 is 1.66 short of 1.618 the length of minuscule wave 1 and minuscule wave 5 has no Fibonacci ratio to either of minuscule waves 1 or 3.
Submicro wave (B) must unfold as a corrective structure. At the low for Friday, this small downwards wave fits best as a five. Submicro wave (B) would most likely be incomplete and may be unfolding as a zigzag.
Submicro wave (B) may not move beyond the start of submicro wave (A) below 1,071.36.
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 base channel on the hourly chart on an arithmetic scale is today perfectly showing where downwards movement is finding support. It may continue to do so.
Only submicro wave (1) may be complete within micro wave 3. This is shown on the hourly chart.
Gold often exhibits swift strong fifth waves, particularly the fifth waves to end its third wave impulses. Be aware of this tendency, because it could mean that any one of or more than one of micro wave 5, subminuette wave v, minuette wave (v) and minute wave v could be very strong upwards movements. If this is the case, then for this wave count it would take price comfortably above the final bear market trend line. If that happens, then this wave count would be the preferred wave count.
Submicro wave (2) would most likely be over because it is finding support at the upwards sloping cyan trend line copied over from the daily chart. This is about where upwards movement has been finding support for the last 12 days. So if a third wave is underway, that line should not be breached.
A clear and strong breach of the cyan line by downwards movement would put further doubt on this bullish wave count.
Ratios within submicro wave (1) are: minuscule wave 3 is 2.19 longer than 2.618 the length of minuscule wave 1, and minuscule wave 5 has no Fibonacci ratio to either of minuscule waves 3 or 1.
Submicro wave (2) may not move beyond the start of submicro wave (1) below 1,092.4.
This wave count requires a strong increase in upwards momentum.
The target for minuette wave (iii) remains the same. At 1,158 it would reach 1.618 the length of minuette wave (i).
Click chart to enlarge. Chart courtesy of StockCharts.com.
Overall, as price has moved higher, it comes with declining volume. The green candlestick for Friday also comes on light volume. This indicates upwards movement may be a correction and not a new upwards trend. The rise in price was not supported by volume, and so is suspicious. This favours the main bear wave count.
Price is finding some resistance about the 200 day moving average and support at the 9 day EMA.
ADX indicates there is an upwards trend but ATR clearly disagrees. This disagreement is persistent now and has lasted for seven sessions. This favours the main bear wave count.
Stochastic shows divergence with price between the last high and the prior high of 8th January. This indicates there is weakness in the last upwards wave and favours the main bear wave count.
A new short term trend line is drawn on On Balance Volume (green). If this line is breached, that would be further warning that the main bear wave count may be correct.
This analysis is published @ 10:11 p.m. EST.