Upwards movement was expected from yesterday’s analysis.
Summary: Upwards movement is most likely a B wave within an expanded flat. Downwards movement is expected to a target at 1,224. A new low below 1,266.69 would confirm that the correction is not over. Alternatively, upwards movement may be a third wave within an extended fifth wave, with a target at 1,350. This has a lower probability, but the probability would increase above 1,293.
New updates to this analysis are in bold.
Last published weekly chart is here.
MAIN 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.
Friday’s upwards movement may have completed minor wave 3.
Ratios within minor wave 3 are: there is no Fibonacci ratio between minute waves iii and i, and minute wave v is just 0.07 short of 1.618 the length of minute wave i.
Minor wave 2 was a very deep 0.97 double zigzag lasting nine days (one more than a Fibonacci eight). Given the guideline of alternation, minor wave 4 may be expected to be a longer lasting sideways structure such as a flat, combination or triangle. It may last a Fibonacci thirteen days most likely. If it is a triangle, it may take longer, perhaps a Fibonacci twenty one days.
Minor wave 4 may end within the price territory of one lesser degree. Minute wave iv has its range from 1,261.94 to 1,190.9. The most likely target for minor wave 4 would be the 0.236 Fibonacci ratio at 1,207 as it lies within this range.
The triangle trend lines now cross over on 10th March. A trend change may be seen on this date. It does not have to be the end of minor wave 4. It may only be the end of minute wave b within it.
The last two daily candlesticks found support at the upper triangle trend line. This may continue to provide support.
There is still more than one structural possibility for minor wave 4. It is most likely to be an expanded flat correction; minute wave b is now 1.08 the length of minute wave a. The normal range for a B wave within a flat is 1 to 1.38 the length of the A wave, so this B wave is still within normal range.
Minor wave 4 may also be unfolding as a double flat or double combination. The second structure in the double for minute wave y may be a flat, zigzag or triangle.
At 1,224 minute wave c would reach 1.618 the length of minute wave a. This is the most common ratio between A and C waves of expanded flats, and expanded flats are very common structures. This target would see minor wave 4 end within the price territory of the fourth wave of one lesser degree. It may end in one more day, if minor wave 4 is very brief and lasts only a total Fibonacci five daily candlesticks. Or more likely a further four days, so that minor wave 4 lasts a total Fibonacci eight daily candlesticks.
The maximum common range for this B wave, if it continues higher, is 1.38 times the length of the A wave at 1,293. Movement above this price point would reduce (but not invalidate) this main wave count and increase the probability of the alternate below.
ALTERNATE ELLIOTT WAVE COUNT
This alternate wave count has a low probability. It is published to consider all possibilities. This wave count is still viable but the probability is reduced.
By simply moving the degree of labelling within minute wave v down one degree, the upwards movement that ended on Friday may be only the first wave within minute wave v.
Minute wave v may be extending.
At 1,350 minute wave v would reach 0.618 the length of minute wave iii.
Minuette wave (ii) will fit as a completed expanded flat correction, with subminuette wave c extending lower and ending with an ending expanding diagonal.
So far there is still some divergence with price and MACD which does not support this wave count. If upwards movement continues and MACD shows stronger momentum than that seen within minuette wave (i), if the divergence disappears, that would increase the probability of this wave count.
Subminuette wave i must now be over within minuette wave (iii). No second wave correction may move beyond its start below 1,266.69 within subminuette wave iii.
Declining volume as price moves higher for this last high also does not support this wave count. Very commonly a third wave shows an increase in volume, not a decrease.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Strong volume for an upwards day of 10th March supports the upwards movement in price. This does not fit the main Elliott wave count. If the next daily candlestick is also green and shows an increase in volume then the main Elliott wave count would be discarded in favour of the alternate. However, data at the hourly chart level for volume indicates that this upwards movement has come with a decline in volume to the last high (not yet shown in StockCharts data) which does support the main Elliott wave count.
ADX remains flat indicating the market is still consolidating, but it is a lagging indicator. ATR is now increasing, so it disagrees, and it indicates the market is more likely trending.
On Balance Volume found support at the dark blue trend line. If upwards movement in price continues, it may be held down when OBV finds resistance at the pink trend line.
There is still divergence with RSI and Stochastics. This supports the main Elliott wave count; more corrective and downwards movement would be expected to resolve this divergence.
This analysis is published @ 09:45 p.m. EST.