Both Elliott wave counts remain valid.
Price should indicate which one is correct in the next one or two sessions.
Summary: It is most likely price will continue sideways for one to two sessions before resuming a downwards trend. If price breaks below 1,212.72 at any stage, then more confidence may be had in a downwards trend. A break above 1,240.65 would reduce the probability of a downwards trend and increase the probability of an upwards trend. A new high above 1,270.85 would confirm an upwards trend.
New updates to this analysis are in bold.
Last published weekly chart is here.
MAIN DAILY ELLIOTT WAVE COUNT
Intermediate wave (1) may be a complete impulse. Intermediate wave (2) may have begun. COT supports this wave count; the majority of commercial traders are currently short. While this does not pinpoint when price should turn, it does support a larger downwards trend about here.
This wave count is identical to the alternate wave count up to the end of minor wave 3 . Thereafter, this main wave count sees minor wave 4 over earlier as a regular flat correction. 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; the alternate will be published until it no longer has the right look.
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 wave count.
A movement at intermediate wave degree should begin with a five down on the daily chart. That is incomplete. Within minute wave iii, no second wave correction may move beyond the start of its first wave above 1,270.85.
It is extremely unlikely that intermediate wave (2) is over already, although the structure could be seen as complete. It has not breached the channel containing intermediate wave (1) and it should be expected to. It is far too shallow for the normal depth of a second wave, particularly the first second wave of a new trend. And finally, it is far too brief for an intermediate degree wave.
MAIN HOURLY ELLIOTT WAVE COUNT
Minute wave iii should be unfolding as an impulse which is the only allowable structure for this third wave. Within the impulse, minuette wave (iii) is complete and 2.04 short of 1.618 the length of minuette wave (i).
Minuette wave (ii) was a deep 0.625 zigzag. Minuette wave (iv) may be expected to be shallow, most likely ending about the 0.382 Fibonacci ratio at 1,231. It is most likely to be a flat, combination or triangle. If it is an expanded flat (very common), combination or running triangle, then it may include a new low below 1,212.72 as part of the correction. A new low does not mean minuette wave (iv) is over.
The green channel is drawn using Elliott’s technique. Draw the first trend line from the ends of minuette waves (i) to (iii), then place a parallel copy on the end of minuette wave (ii). Expect minuette wave (iv) to most likely end if price comes up to touch the upper edge of the channel.
The following downwards movement for minuette wave (v) may end about the lower edge of the channel. However, sometimes Gold exhibits strong fifth waves which breach channels.
Minuette wave (ii) lasted one day. Minuette wave (iv) may be a little longer lasting as flats, combinations and triangles tend to be longer lasting structures than zigzags.
Minuette wave (iv) may not move into minuette wave (i) price territory above 1,240.65.
Although price is below the lower edge of the blue channel, it is not breached by convincing downwards movement; this movement is more sideways. The breach needs to be clearer for the alternate to be discarded.
ALTERNATE DAILY ELLIOTT WAVE COUNT
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.
Minor wave 4 may be complete as a double combination: expanded flat – X – zigzag. The structure is now complete and price has found support at the lower edge of the blue best fit channel. Downwards movement must end here for this wave count.
Minute wave y has ended slightly below minute wave w; the structure still has a mostly sideways look to it. But it must end here if it is to retain the right look.
At 1,284 minor wave 5 would reach 1.618 the length of minor wave 1.
Although the invalidation point must technically be placed at the high of minor wave 1, this wave count would be discarded if price breaches the lower edge of the blue channel at the daily chart level. Minor wave 4 may not move into minor wave 1 price territory below 1,088.79.
There is perfect alternation and good proportion between minor waves 2 and 4. Minor wave 2 is a deep double zigzag lasting nine days (one more than a Fibonacci eight), and minor wave 4 is a shallow combination lasting a Fibonacci thirteen days.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
A-B-C of a zigzag and 1-2-3 of an impulse both subdivide exactly the same way: 5-3-5. For this alternate, minute wave y is a complete zigzag.
Within minor wave 5 upwards, no second wave correction may move beyond the start of its first wave below 1,212.72.
Some confidence may be had in this wave count if price breaks above 1,240.65. Confirmation would come with a new high above 1,270.85. At that stage, upwards movement could not be another second wave correction within a downwards trend, so the downwards trend must be over.
At 1,284 minor wave 5 would reach 1.618 the length of minor wave 1.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Another downwards day is below the lower edge of the prior consolidation zone. This looks like there has been a downwards breakout and price may throw back to the trend line which previously provided support.
Downwards movement for Thursday came with a decline in volume; the fall in price was not supported by volume. However, the prior downwards day was well supported.
ADX is declining still indicating the market is not trending. The +DX line is close to but has not yet crossed below the -DX line, so ADX is not yet indicating a trend change. If these lines cross over, then a trend change would be indicated.
ATR is still declining indicating the market is not trending.
On Balance Volume is bearish. The break below the orange line was bearish and a throwback to find resistance was further bearishness. OBV may find support at the blue line. If it does, that may be where minor wave A for the main wave count ends and a bounce for minor wave B begins.
RSI is still close to neutral. There is room for price to fall or rise.
Stochastics is entering oversold. This is not yet clear enough to indicate an end to downwards movement here.
This analysis is published @ 02:26 a.m. EST on 25th March, 2016.