Gold is still range bound.
On Balance Volume is giving a clear and strong signal today of what direction price should be expected to break out of this range.
Summary: Gold is still technically range bound but an upwards breakout may be imminent. On Balance Volume is giving a clear signal that price is very likely to break out upwards. In the short term, a little downwards movement may unfold for a few hours to about 1,250. Thereafter, a new high reasonably above 1,270.08 would provide confidence that price is very likely to break out upwards. After price breaks above 1,280 with a day on increased volume, then it may throw back to retest 1,280 a few days later. If price behaves like that, it may offer a perfect set up to join a confirmed upwards trend.
New updates to this analysis are in bold.
Last published weekly chart is here.
DAILY ELLIOTT WAVE COUNT
Intermediate wave (2) may be a double combination with minor wave X ending earlier as labelled.
Minor wave W is a zigzag, the first structure in a double. The two structures in the double may be joined by a simple zigzag for minor wave X in the opposite direction.
Minor wave Y may now be a complete running contracting triangle as labelled here and on the main hourly chart, or it may be an incomplete running barrier triangle as labelled on the alternate hourly chart below. The triangle is supported by MACD hovering at the zero line here on the daily chart.
Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,046.27.
The next wave up for intermediate wave (3) should be swift and strong. It must move above the end of intermediate wave (1) at 1,282.68. It must move far enough above this point to allow room for intermediate wave (4) to unfold and remain above intermediate wave (1) price territory.
It is possible today that intermediate wave (3) has just begun. At 1,477 it would reach equality in length with intermediate wave (1). This target is reasonable because intermediate wave (2) was very shallow.
If intermediate wave (2) is over as labelled, then it may have totalled 33 sessions, just one less than a Fibonacci 34. Minor waves W, X and Y may all have been of even duration, all over in 11 sessions.
MAIN HOURLY ELLIOTT WAVE COUNT
The triangle for minor wave Y may now be complete as a running contracting triangle.
Minute wave e subdivides as a zigzag and falls short of the A-C trend line which is the most typical look for an E wave of a triangle.
The first wave up may subdivide as a five wave impulse. This should be followed by a three down. Minute wave ii would most likely correct to the 0.618 Fibonacci ratio of minute wave i at 1,250. It may not move beyond the start of minute wave i below 1,237.97.
When minute wave ii is a complete three wave structure, then a small third wave up should unfold and should show some increase in upwards momentum.
SECOND HOURLY ELLIOTT WAVE COUNT
It is possible that the triangle is an incomplete barrier triangle.
A barrier triangle has a B-D trend line which is essentially flat. In practice this means minute wave d may move slightly above the end of minute wave b at 1,270.08. As long as the B-D trend line remains “essentially flat” this wave count will remain valid. Unfortunately, this is the only Elliott wave rule which has any grey area. A new high reasonably above 1,270.08 is required to invalidate this idea.
If the triangle is incomplete, then it would be confirmed with a new low below 1,237.97. At that stage, not much more downwards movement would be expected. Minute wave e would be most likely to end short of the A-C trend line.
Minute wave e of a barrier triangle may not move beyond the end of minute wave c below 1,227.39. This invalidation point is black and white.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Four days in a row of upwards movement on increasing volume indicates there is support for this rise in price. On Balance Volume is today giving a clear bullish signal. The balance of probability has shifted to an upwards breakout and it looks imminent.
Price is still range bound though. There has not yet been an upwards breakout. Some resistance may be expected about 1,280. How price behaves when it gets to this round number which is providing resistance will be indicative. An upwards breakout would be seen by a strong green daily candlestick closing comfortably above 1,280 on a day with increased volume, preferably a volume spike.
Sometimes after a breakout price turns back to retest the prior line of resistance / support a few days later. When price behaves like that, it offers a perfect opportunity to join what is most likely a trend. If that happens here after an upwards breakout, then the opportunity should be taken to enter long there.
Prior to an upwards breakout, the risk is that price may continue further sideways within the range of 1,280 to 1,210 before a breakout.
ADX is today increasing. The +DX line is above the -DX line. ADX is indicating a new upwards trend is developing.
ATR may be beginning to agree as today it too is increasing.
On Balance Volume is giving a clear strong bullish signal with a break above the orange line. OBV is a fairly reliable signal of price direction for a breakout from a consolidation.
Neither RSI nor Stochastics are extreme. There is room for price to rise further.
This analysis is published @ 06:54 p.m. EST.