A new low indicated that the correction was deepening to be closer to the 0.618 Fibonacci ratio.
This was not what was expected for Monday.
Summary: A target for this downwards movement to end is close by at 1,238. Thereafter, a third wave up should begin; confidence may be had above 1,255.66 and confirmation above 1,270.85. If price breaks below 1,225.95, a new alternate may be correct which expects intermediate wave (2) has arrived.
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 a Fibonacci 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
The hourly chart will be shown from the low of 10th March to today, so that it may be compared with the alternate below. This main wave count has a better fit.
Minor wave 4 was an expanded flat correction. Within minor wave 4, the upwards move labelled minute wave b fits well as a three, an expanded flat.
This main wave count sees the upwards wave labelled minute wave i as a five wave impulse. There are no Fibonacci ratios between minuette waves (i), (iii) and (v) within minute wave i.
Minute wave ii is still seen as a double zigzag, which is incomplete.
There is a triangle for subminuette wave b within the first zigzag of minuette wave (w). This fits perfectly on the hourly and five minute charts.
A small cyan best fit channel is drawn about this downwards movement. When it is breached by upwards movement, that shall be earliest indication of a trend change. Confidence may be had with a new high above 1,255.66 and final price confirmation would come with a new high above 1,270.85.
When minute wave ii is complete, then a target may be again calculated for minute wave iii. This cannot be done today because we do not know where minute wave iii begins.
At 1,238 micro wave 5 would reach equality in length with micro wave 1. Micro wave 5 should be expected to be surprisingly short; Gold often exhibits surprisingly short fifth waves out of its fourth wave triangles. Micro wave 5 is likely to make at least a slight new low below the end of micro wave 3 at 1,240.65 to avoid a truncation.
Minute wave ii may not move below the start of minute wave i at 1,225.95. If this wave count is invalidated, then the alternate below should be used.
ALTERNATE DAILY ELLIOTT WAVE COUNT
What if my analysis of intermediate wave (1) as incomplete is wrong? If it is complete, what would that look like? Does it fit?
This wave count is identical to the main wave count up to the end of minor wave 3 . Thereafter, instead of seeing minor wave 4 as an expanded flat correction this wave count must see it as a regular. There is still alternation between minor waves 2 and 4: minor wave 2 is a deep 0.97 double zigzag and minor wave 4 is a shallow 0.18 regular flat. The proportions are not as good though: minor wave 2 lasted nine days and minor wave 4 only four days. This slightly reduces the probability of this wave count.
Ratios within intermediate wave (1) are: there is no Fibonacci ratio between minor waves 1 and 3, and minor wave 5 is 2.95 points longer than equality with minor wave 1. This good Fibonacci ratio adds a little support for this alternate wave count.
A movement at intermediate wave degree should begin with a five down on the daily chart. That is incomplete. Within the first five down, no second wave correction may move beyond the start of its first wave above 1,282.68.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
An ending diagonal is seen for minuette wave (v) at the end of minor wave 4. This downwards wave fits better as a three than a five, but it will fit both ways; it is ambiguous.
The downwards wave labelled minute wave i is seen as a five wave structure for both wave counts.
The upwards wave labelled minute wave ii is seen here as a zigzag. It has a better fit as an impulse (main wave count), but again it will fit either way; it is ambiguous. There is no Fibonacci ratio between minuette waves (a) and (c).
Ratios within minuette wave (c) are: there is no Fibonacci ratio between subminuette waves iii and i, and subminuette wave v is 0.91 longer than 2.618 the length of subminuette wave i.
The biggest problem with this new alternate wave count is what is happening with downwards movement. So far there is too much overlapping for minute wave iii to be complete, and it has not made a new low below minute wave i which it must do. Downwards movement looks more corrective than impulsive. The only structure minute wave iii may unfold as is an impulse.
Within the current downwards wave for minute wave iii, this wave count must ignore what looks like a triangle for minuette wave (ii). A triangle may not be the sole corrective structure for a second wave.
Another triangle looks like it is unfolding. For this wave count, if it is a fourth wave, then the middle of minute wave iii has passed yet momentum has not increased beyond that seen for minute wave i, and the middle of minute wave iii has passed yet price has not moved beyond the end of minute wave i. This gives this part of the wave count a strange look, so the probability is reduced.
This wave count is technically possible, but it has a low probability. It needs price confirmation below 1,225.95 before confidence may be had in it.
If this wave count is confirmed, then a multi week correction has begun for intermediate wave (2).
Within minute wave iii, subminuette wave iv may not move into subminuette wave i price territory above 1,255.66.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Downwards movement for Monday still has a relatively small real body for the daily candlestick. Volume increased beyond Friday but not beyond volume for Thursday. Overall, as price falls, volume is still declining.
ADX is still declining indicating the market is not trending; it is consolidating. ADX is not indicating there has been a trend change: the +DX line remains above the -DX line. However, ADX is a lagging indicator as it is based upon a 14 day average.
ATR is declining indicating the market is not trending. With ADX and ATR in agreement, it should be expected that the market is still consolidating. Price remains range bound below about 1,280 and above about 1,225. During the consolidation, it is still an upwards day which has strongest volume indicating an upwards breakout is still more likely than downwards. This normally is a reliable indicator of price direction for Gold during a consolidation.
On Balance Volume has today given a clear bearish signal with a break below the orange support line. This line is not highly technically significant though; it is not long held nor often tested. This signal is weak, but it is bearish. The light blue line offers stronger technical significance. If OBV moves lower to test that line, then a break below would be very bearish whereas a move up from there would be very bullish.
RSI is back close to neutral. There is room for price to rise or fall.
Stochastics is also close to neutral.
This analysis is published @ 08:05 p.m. EST.