Upwards movement was expected to end either yesterday or very soon.
This upwards movement for Wednesday was unexpected but does not yet invalidate the main Elliott wave count.
Summary: Price is squeezed between the final bear market trend line and a short term support line (now coloured green on all charts for clarity). A break above the cyan line or below the green line is required. The bear wave count is favoured and better supported by volume analysis; this upwards movement is weak and should be expected to end here or very soon. The bull wave count still comes with the strong caveat that we have zero confirmation of a super cycle degree trend change from bear to bull for gold.
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.
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 have ended just above the 0.618 Fibonacci ratio at 1,135.
Subminuette wave c may be a complete ending expanding diagonal.
Price has overshot the final bear market trend line. This has happened before at the high labelled minute wave ii at the top left of the daily chart. That correction overshot the bear market trend line by over $8 yet price turned down to make new lows. The trend line must be properly breached for this wave count to reduce in probability. A proper breach would be a full daily candlestick above the final bear market trend line and not touching it. I would prefer to see a breach at the weekly chart level for full confidence in a trend change at super cycle degree. If that happens, this bear wave count would be discarded.
We should assume the trend remains the same until proven otherwise. We should assume the bear market remains intact while that line is not properly breached.
I have created a parallel copy of the final bear market trend line today and placed it on the high of minute wave ii, top left of the chart at the prior overshoot. The daily candlestick for today may find some resistance at this parallel copy.
Tomorrow should see a red daily candlestick for this bear wave count and price return below the bear market trend line.
I added an important trend line which is currently offering support to current upwards movement to this daily chart. The trend line is coloured green (to differentiate it from the cyan bear market trend line). It is vital that this green line is clearly breached by downwards movement before confidence may be had that minuette wave (ii) is over. Price remains above this line. If this line is breached by downwards movement, that shall be strong confirmation that upwards movement is over.
At this stage, a new low below 1,109.31 would invalidate the alternate wave count and provide strong price confirmation for this main wave count.
Gold often exhibits swift strong fifth waves. Upwards movement for Wednesday looks like a strong fifth wave, typical of commodities.
Submicro wave (C) is now 1.82 longer than 0.618 the length of submicro wave (A). The structure within submicro wave (C) again looks complete.
Ratios within submicro wave (C) are: there is no ratio between minuscule waves 3 and 1, and minuscule wave 5 is 1.59 longer than equality with minuscule wave 3.
It is very important that price breaks below the green trend line for confidence that minuette wave (ii) is over. A clear breach of that line by downwards movement would provide trend line confirmation that the upwards wave of minuette wave (ii) should be over and the next wave down to new lows should be underway.
The risk is that the bull wave count could be correct while price remains above that line at this stage.
The invalidation point will remain where it is at the daily chart level while there is no confirmation of a trend change and the end of minuette wave (ii). Minuette wave (ii) could continue higher. It may not move beyond the start of minuette wave (i) above 1,191.37.
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 is closing above the 200 day moving average today. It has done this before and yet turned back down to make new lows. This alone is not enough confirmation of a big trend change from bear to bull.
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 is closing above the final bear market trend line today. Again, it has done this before yet turned back down to make new lows. A clear breach of this line is required to confirm this bull wave count. If we see a full daily candlestick above that line and not touching it in the next few days, then this bull wave count shall be preferred.
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.
Only submicro wave (1) may be complete within micro wave 3. This is shown on the hourly chart.
When micro wave 3 is over, then micro wave 4 may not move into micro wave 1 price territory below 1,109.31.
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.
The hourly chart for this alternate today will show the same piece of movement as the main hourly chart.
The middle of the third wave may have just passed for this alternate wave count.
Minuscule wave 4 may not move into minuscule wave 1 price territory below 1,129.69 within sub micro wave (3).
At 1,158 minuette wave (iii) would reach 1.618 the length of minuette wave (i).
Along the way up, this wave count expects price to find strong support at the green trend line. This third wave should show a steeper slope; the slope should not reduce. If price breaks below the green line, the probability that a big third wave is continuing would be greatly reduced.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Gold often exhibits swift strong fifth waves which end with a volume spike. Today’s rise in price was supported by volume. This could be the middle of a big third wave, but it may also be a volume spike to end a movement.
ADX still indicates there is a trend and it is upwards.
ATR overall disagrees, but today saw an increase for ATR.
RSI is not quite overbought, but it is close.
Stochastics shows strong divergence with price today: as price made a new high Stochastics was flat. This indicates weakness in price despite strong volume. This supports the bear wave count.
Overall, the bear wave count is still supported over the bull, but the picture is still unclear.
Price has closed above the 200 day moving average. It has done this before and yet turned down to make new lows. This could happen again. If price continues higher and there is at least one full daily candlestick above the 200 day moving average, then the probability of the bull wave count would increase and the bear would decrease.
This analysis is published @ 07:14 p.m. EST.