A correction was expected to continue.
A small real body for mostly sideways movement fits the expectation.
Summary: The correction is still incomplete. It looks like it may most likely continue sideways as a triangle which may end in three more trading days. It is still possible that it could end tomorrow as a quicker zigzag but this looks much less likely. The trend is up, so the breakout should be up.
New updates to this analysis are in bold.
Last published weekly chart is here.
DAILY ELLIOTT WAVE COUNT
Gold has very likely changed from bear to bull.
So far, within the first five up, the middle of the third wave is now most likely complete. The strongest move may still be ahead. Gold typically exhibits swift strong fifth waves to end its third wave impulses. Look out for surprises to the upside for minute wave v and minor wave 5.
At 1,339 minor wave 3 would reach 6.854 the length of minor wave 1. When minute wave iv is confirmed as over, then this target may be calculated at a second degree. At that stage, it may widen to a zone, it may change, or a second target may be added.
Minute waves i, ii and now iii are complete within minor wave 3.
The pink channel is a best fit. Draw the first trend line from the highs labeled minute waves i to iii then place a parallel copy lower to contain the whole upwards wave. Minute wave iv may find support at the lower pink line. If price touches that line, it should offer a low risk entry point to join the upwards trend.
The main hourly wave count now expects a triangle is most likely unfolding sideways. Upwards movement is finding resistance at the lilac line and downwards movement is finding support at the (a)-(c) triangle trend line. To see how to draw the lilac line see the weekly chart here.
If the alternate hourly wave count is correct, then the lower pink trend line may be breached. Sometimes fourth waves are not contained nicely within channels; sometimes they breach channels.
Minute wave iv may not move into minute wave i price territory below 1,081.57.
MAIN HOURLY WAVE COUNT
This main hourly wave count expects to see alternation in structure between the zigzag of minute wave ii and the triangle of minute wave iv. This is the main wave count for this reason only.
Minuette wave (b) subdivides as a double zigzag. Minuette wave (a) may be seen as a single zigzag. Minuette wave (b) is less than 0.9 the length of minuette wave (a), so a flat correction is not possible as the minimum requirement was not met. A triangle may still be unfolding sideways.
Within a possible regular contracting or barrier triangle, minuette wave (c) may not move below the end of minuette wave (a) at 1,190.9. Thereafter, minuette wave (d) may not move substantially above the end of minuette wave (b) at 1,253.1. The triangle will remain valid as long as the (b)-(d) trend line remains essentially flat.
This main wave count expects minute wave iv to find support at the pink trend line. It may end about the 0.236 Fibonacci ratio at 1,213.91. If it continues for a further three sessions, it may total a Fibonacci thirteen daily candlesticks.
Within minuette wave (c) downwards, subminuette wave b may not move beyond the start of subminuette wave a above 1,253.10.
Minuette wave (c) may end at the lower green trend line. This is drawn across the daily lows for 16th February and 22nd February (see the daily chart). Extend this line out and look for price to find support there.
Triangles take time and test our patience. That is their purpose. This one still has a few days of sideways movement to go.
ALTERNATE HOURLY WAVE COUNT
Minute wave iv may be continuing as a zigzag. This would offer no structural alternation with minute wave ii which was also a zigzag. For this reason, this must be an alternate wave count with a lower probability.
If any movement below 1,190.9 is seen, then the triangle would be invalidated leaving only this alternate wave count. At that stage, expect price to continue lower to the target and overshoot the pink trend line.
At 1,182 minuette wave (c) would reach equality in length with minuette wave (a). This is close to the 0.382 Fibonacci ratio at 1,184 giving a $2 target zone with a reasonable probability.
This alternate wave count could see minute wave iv end in just one more session. It would not exhibit a Fibonacci duration.
SECOND ALTERNATE HOURLY WAVE COUNT
I have learned the hard way to always consider alternate ways of labelling a triangle when it looks like one may be unfolding. What if the triangle is an X wave within a B wave double zigzag?
Minute wave iv is still seen as a zigzag. Minuette wave (a) fits as a five wave impulse. Minuette wave (b) may not move beyond its start above 1,261.94.
This wave count expects the triangle is now complete and the breakout will be upwards. A new high above 1,253.10 would invalidate the first two hourly wave counts leaving only this one.
This wave count has a low probability. X waves within double zigzags are almost always brief shallow zigzags.
When minuette wave (b) is complete, then this wave count expects minuette wave (c) to make at least a slight new low below minuette wave (a) at 1,190.90 to avoid a truncation. It would most likely end about the 0.382 Fibonacci ratio at 1,184.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price remains constrained within the upper green line offering resistance and the lower red line offering support. A decline in volume today for a green candlestick indicates the market is still correcting.
ADX is flat to declining indicating the market is correcting. ATR is flat, so it agrees.
Apart from the outlier of 16th February, highest volume is for an upwards day. The 16th of February may include data for the holiday session of 15th February for which there is no daily candlestick in StockCharts data. If this candlestick for 16th February is ignored, then the breakout direction indicated by volume should be upwards.
If the volume for the daily candlestick of 16th February is taken into account. then the breakout direction indicated by volume should be downwards.
On Balance Volume may be providing an early indication. It has broken above all of its trend lines. OBV is often a reliable early indicator for price. This supports the Elliott wave count.
RSI is neutral. There is plenty of room for this market to rise or fall. Stochastics has returned from overbought.
This analysis is published @ 08:53 p.m. EST.