A break below a short term trend line on the hourly chart indicates a correction has begun.
Summary: The trend is still up, but a multi day correction looks like it has arrived. Choppy overlapping sideways movement may last a few days and end either within 1,174 – 1,164 or at 1,151.
New updates to this analysis are in bold.
DAILY ELLIOTT WAVE COUNT
A new high above 1,191.37 has invalidated the bear wave count and confirmed that Gold is now in a bull market.
Super Cycle wave (b) may be any one of 23 possible corrective structures. First, a move of this size should have a clear five up on the daily and weekly charts. That is still to complete.
So far, within the first five up, the middle of the third wave is now most likely complete. The strongest move may yet be ahead. Gold typically exhibits swift strong fifth waves to end its third wave impulses. Look out for surprises to the upside for one or more of subminuette wave v, minuette wave (v), minute wave v, and minor wave 5.
At 1,227 minor wave 3 would reach 4.236 the length of minor wave 1. If this target is wrong, it may not be high enough. Minor wave 3 may not exhibit a Fibonacci ratio to minor wave 1.
Within minor wave 3, minute waves i and ii are complete. Minute wave iii is incomplete.
Within minute wave iii, minuette waves (i), (ii) and now (iii) are complete.
Minuette wave (ii) was a time consuming and deep double zigzag which lasted 4 sessions. Minuette wave (iv) should also be a multi day correction showing up clearly on the daily chart.
Subminuette wave iv was over within one session, lasting just 12 hours and very shallow. This is a typical tendency of Gold when fifth waves are swift and strong. When this happens fourth wave corrections are forced to be more brief and shallow, giving an impulse a slightly three wave look and ending with a sharp spike. Look out for this tendency again as minor wave 3 comes to an end in the next couple of weeks or so.
Draw a channel about the impulse of minute wave iii. Draw the first trend line from the highs labelled minuette waves (i) to (iii), then place a parallel copy on the low labelled minuette wave (ii). Minuette wave (iv) should find support at the lower edge of the channel. Copy it over to the hourly chart.
HOURLY WAVE COUNT
It is most likely today that minuette wave (iii) is over. The small red daily candlestick for Tuesdays session makes sense if minuette wave (iv) has arrived.
Minuette wave (iv) should exhibit alternation with minuette wave (ii). Minuette wave (ii) was a deep 0.76 double zigzag lasting four sessions. Minuette wave (iv) should be shallow. It is most likely to be a flat, combination or triangle. These structures tend to be more time consuming than zigzags.
There are two competing tendencies regarding the duration of minuette wave (iv). It may be forced to be more brief and shallow than otherwise, if the following fifth wave of minuette wave (v) is to be a typically swift strong fifth wave. But it may be longer lasting than minuette wave (ii) because sideways corrections tend to be quicker than zigzags.
At this stage, it is impossible to say how long it would last. It is extremely unlikely to be over today as upwards movement is subdividing as a three. It may be expected to most likely last a Fibonacci three or five sessions.
Minuette wvae (iv) may end within the price territory of the fourth wave of one lesser degree. Subminuette wave iv has its price territory from 1,174 to 1,164.
If minuette wave (iv) is a little deeper, it may end about the 0.382 Fibonacci ratio at 1,151.
Minuette wave (iv) may not move into minuette wave (i) price territory below 1,112.19.
At this early stage, there are 23 possible structures that this fourth wave may unfold as, so it is impossible to tell which it will be only that it is unlikely to be a zigzag or zigzag multiple. That leaves a likely 20 structures. The labelling within it will change as this correction unfolds, as the structure becomes clearer. The focus cannot be on what pathway price may take during the correction; the focus must be on identifying when it is complete.
If minuette wave (iv) is an expanded flat, running triangle or combination, then it may include a new high above its start at 1,200.67. A new high does not mean this correction is over. There is no upper invalidation point for this correction.
Corrections are not good trading opportunities. They present an opportunity to join the trend when they are complete.
Click chart to enlarge. Chart courtesy of StockCharts.com.
This section of the analysis is updated at 12:19 a.m. EST on 10th February, 2016.
A red doji on lighter volume strongly supports the Elliott wave count in expecting a period of consolidation.
Price has made a major new high above the prior major high of 15th October. Price is above the 200 day moving average. The final bear market trend line has been substantially breached. It is reasonable to expect now that Gold has had a major trend change and is in a bull market.
Volume increased as price moved higher. Now as the first red candlestick appears in several days it comes with lighter volume. This supports the idea that the trend is up.
ADX is still increasing and indicates there is an upwards trend. Overall ATR is also increasing and is in agreement.
On Balance Volume has found resistance at the upper dark blue line initiating a turn down from price today. OBV may find support initially at the green trend line.
This consolidation may return Stochastics and RSI from oversold, so it should take a few days to manage that.
This analysis is published @ 04:01 p.m. EST.