A little more upwards movement was expected to end about 1,245 – 1,247, and then a small wave down was expected. Price turned at 1,248.44.
Summary: The target for a short fifth wave up is at 1,261. If this target is wrong, it may be too low. On the way up, a new high above 1,248.44 would confirm the fourth wave triangle as complete and a fifth wave up underway.
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.
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 may have completed today in a total Fibonacci thirteen sessions. 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.
Gold often exhibits very short quick fifth waves after its fourth wave triangles. At 1,261 minute wave v would be short and only equal in length with minute wave i.
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 mostly for this reason.
Minuette wave (b) will only subdivide as a double zigzag within the triangle. Only one of the five subwaves of a triangle may be a double zigzag and all other subwaves must be simple threes. Minuette wave (e) may not continue lower as a double zigzag.
If the labelling of minuette wave (e) is correct, then it should be over. If the labelling of minuette wave (e) is wrong (it may be that only subminuette a is complete), then it may not move below the end of minuette wave (c) at 1,211.45.
There are two completing tendencies for minute wave v upwards. This is a fifth wave to end minor wave 3. Fifth waves to end Gold’s third wave impulses are often very strong and extended. However, Gold usually exhibits surprisingly short fifth waves to follow its fourth wave triangles. It is my judgement that minute wave v is more likely to be short as it follows a triangle for minute wave iv, than it is to be a long extension.
If the target at 1,261 is reached and the structure is incomplete, then more upwards movement should be expected. If price keeps rising through the target at 1,261, then the next target is at 1,316 where minute wave v would reach 1.618 the length of minute wave i.
A new high above 1,248.44 would invalidate the alternate below and provide price confirmation that minute wave iv is over and minute wave v is underway.
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.
At this stage, if minute wave iv is continuing as a zigzag, then minuette wave (b) within it may be a triangle. This wave count no longer has the right look at the daily chart level. A single zigzag for minute wave iv should not have taken this long to unfold and it would be much longer in duration than the single zigzag for minute wave ii which lasted seven daily candlesticks. While a triangle could be expected to be longer lasting a zigzag should not be.
This wave count has a low probability, but alternates should always be considered for triangles. A new low below 1,211.45 would invalidate the main hourly wave count and confirm this alternate.
At that stage, minute wave iv may be expected to end about the 0.382 Fibonacci ratio at 1,184.
Within the triangle of minuette wave (b), the final wave for subminuette wave e may not move beyond the end of subminuette wave c above 1,248.44.
Click chart to enlarge. Chart courtesy of StockCharts.com.
A triangle pattern looks to be forming. The trend lines are drawn across the top and bottom of the pattern. This is a fairly reliable continuation pattern. The breakout should be up. If price breaks above the upper green line on a day with an increase in volume, that would be a classic breakout from this pattern.
A decrease in volume now overall for the last few days again gives this consolidation a more typical look.
ADX is flat to declining indicating the market is correcting. ATR is now flattening off, so it now agrees with ADX.
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 @ 08:28 p.m. EST.