If price kept rising, two targets were given for Friday: 1,280 and 1,350.
The first target was almost met. The high for Friday was 1,279.45.
Summary: Minor wave 3 is very likely to be over at Friday’s high. Another correction should now begin for minor wave 4. It may last a Fibonacci eight or thirteen days and would most likely end about 1,207.
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.
Minor wave 4 would probably not be able to end on 9th March when the triangle trend lines cross over. On 9th March a trend change may occur, but it may be a small change. This may be where minute wave a within minor wave 4 ends.
A movement at minor degree should begin with a five wave structure downwards at the hourly chart level, followed by a three up which may not move beyond the first five down above 1,279.45. In the short term, a new high above 1,279.45 would invalidate this first wave count.
Once a 5-3-5 down is complete, then the invalidation point at 1,279.45 would not longer apply. Minor wave 4 may be a flat, combination or running triangle. These structures may include a new high above 1,279.45.
ALTERNATE ELLIOTT WAVE COUNT
This alternate wave count has a low probability. It is published to consider all possibilities.
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.
Downwards movement for Friday found support at the lilac trend line.
Minor wave 3 may end on 9th March, if it ends when the triangle trend lines cross over.
Minuette wave (ii) may end about the 0.618 Fibonacci ratio of minuette wave (i) at 1,246. If this second wave count is correct, this second wave correction should end on Monday. Monday may print a green daily candlestick.
Minuette wave (ii) may not move beyond the end of minuette wave (i) below 1,224.70.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Two things on this chart strongly indicate upwards movement is over for now for Gold: the volume spike for Friday and strong divergence between price and RSI.
Gold often ends its fifth waves on a sharp movement with a volume spike. Friday’s volume spike looks typical. That volume is for a downwards day which further reinforces the idea that more downwards movement is now ahead for Gold. The fall in price was supported by volume on Friday.
ADX and ATR finally caught up as they now indicate there is an upwards trend. Both these indicators are lagging as they are based on 14 day averages.
RSI shows strong divergence with price: as price made new highs for the last two days RSI failed to make corresponding new highs. A failure swing by RSI is strong indication of a trend change here.
Stochastic also shows divergence with price. Downwards movement should now be expected to continue until Stochastics reaches oversold and price finds support at the same time. The first horizontal line of support is about 1,190.
I will use the trend lines on On Balance Volume to assist in finding the end of downwards movement. When the Elliott wave structure on the hourly chart may be considered complete, if OBV finds support at the same time, this may be the end of downwards movement.
This analysis is published @ 09:00 p.m. EST.