A break slightly above 1,266.27 to 1,266.75 meant price was expected to continue higher, but this was not what happened.
The alternate hourly Elliott wave count was confirmed with a new low below 1,255.66. At that stage, the target was 1,243.50.
Summary: It is highly likely that a third wave up should continue on Monday towards 1,320. The risk to the wave count is at 1,225.95. Until there is a small five up on the hourly chart, the invalidation point must remain here.
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 often exhibits swift strong fifth waves typical of commodities.
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.
There is perfect alternation between the deep double zigzag of minor wave 2 and the very shallow 0.23 expanded flat correction of minor wave 4.
Minor wave 4 is within the price territory of one lesser degree. Minute wave iv has its range from 1,261.94 to 1,190.9.
Upwards movement has confirmed that the last wave down within minor wave 4 is complete. The probability that minor wave 4 in its entirety is complete is high. Within minor wave 5, no second wave correction may move beyond the start of its first wave below 1,225.95.
Minor wave 1 lasted one day. Minor wave 2 lasted nine days (one longer than a Fibonacci eight). Minor wave 3 lasted fifty four days (one short of a Fibonacci fifty five). Minor wave 4 lasted seven days (one short of a Fibonacci eight).
At this stage, minor wave 5 may be expected to last either a Fibonacci five or eight days. It may be swift and strong but not necessarily extended. It is very likely to end with a strong upwards day on a volume spike.
HOURLY ELLIOTT WAVE COUNT
Minute wave ii is most likely now a complete double zigzag, which is how it subdivides best on the five minute chart and how it looks on the hourly chart. Minute wave ii has fallen 4.72 short of the 0.618 Fibonacci ratio of minute wave i which is at 1.243.1.
Minute wave iii should show an increase in upwards momentum beyond that seen for minute wave i.
The pink channel is a base channel about minute waves i and ii. Along the way up, minute wave iii should have the power to break above the upper edge of the base channel.
At 1,320 minute wave iii would reach 1.618 the length of minute wave i. This fits with the higher target for minor wave 5 to end at 1,338 where it would reach 2.618 the length of minor wave 1.
Double zigzags are common structures. Triple zigzags are very rare. I have only ever seen four or five of them during my eight years of daily Elliott wave analysis. If my labelling of minute wave ii as a double zigzag is correct, then the only way it could continue lower now would be as a very rare triple zigzag. The probability of this is very low. But low probability is not the same as no probability. And my labelling of minute ii as a double zigzag could be wrong.
Minute wave ii may not move beyond the start of minute wave i below 1,225.95. This is the risk with the wave count at this stage.
If a small five up develops at the hourly chart level, then the invalidation point will be moved up to the end of minute wave ii. A small five up would confirm that minute wave iii is underway.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Two small red daily candlesticks with small real bodies with Friday’s candlestick a doji indicates that although price has moved lower it is hesitant. The bears are winning but not with conviction. Friday’s downwards movement also comes with a decline in volume. The fall in price for Friday was not supported by volume and is suspicious. This is most likely a small correction against the trend.
This strongly supports the Elliott wave count.
ADX is still flat and price is still within the consolidation zone. There has not yet been a breakout.
During the consolidation which began back on 7th March, it is still an upwards day which shows strongest volume. This indicates an upwards breakout is more likely than downwards. This is usually a reliable indicator of price direction for Gold.
ATR is also flat, in agreement with ADX.
On Balance Volume is slightly breaking below the lower orange trend line. If this break becomes clearer on Monday, that would be concerning for the Elliott wave count and would indicate that the wave count may be wrong. If OBV turns up from here on Monday, the strength of that line would be reinforced. That would be a bullish signal.
Neither RSI nor Stochastics are extreme. There is room for price to rise or fall.
This analysis is published @ 02:07 a.m. EST on 19th March, 2016.