Price moved lower again as yesterday’s Elliott wave count expected.
Summary: The correction now looks to be complete. Price looks like it may be exhibiting a typical throwback to support after an upwards breakout. On Balance Volume may assist to stop the fall in price here. The Elliott wave count expects a third wave up at two degrees. The risk to any long positions entered here is at 1,237.97. The target for the third wave to end is at 1,477.
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.
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 be a running contracting triangle. The triangle is supported by MACD hovering at the zero line here on the daily chart.
Minor wave 2 may not move beyond the start of minor wave 1 below 1,237.97.
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.
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 a Fibonacci 34 sessions.
HOURLY ELLIOTT WAVE COUNT
The degree of labelling within the start of intermediate wave (3) has been moved up one degree today. This expects that minor wave 3 will be extended, which is very common.
At 1,378 minor wave 3 would reach 1.618 the length of minor wave 1. Minor wave 4 is likely to be relatively quick and may also be shallow, so the target is provided for shorter term traders because it may not be very useful for position traders. For position traders following the trend, the higher target at 1,477 should be used.
Minor wave 2 now looks like a completed double zigzag. Draw a small best fit channel about the second zigzag of minute wave y (shown in lilac). When upwards movement breaks above the upper edge of this small channel, it would provide some trend channel confirmation that minor 2 is most likely over and minor wave 3 has most likely begun.
After the upper edge of the lilac channel is breached, then price may turn down to throwback to the upper trend line, finding support there. If this is how price behaves, it would present a good entry opportunity to join the upwards trend.
At this stage, with minor wave 2 most likely over, any entry point about here should be profitable within 24 hours.
If the labelling of minor wave 2 as a double zigzag is correct, then the probability is very high that it is over. For minor wave 2 to continue lower, it would have to be a triple zigzag which is one of the rarest Elliott wave structures. A trend change here is very likely based on the probability of structure.
The risk to any long positions here is at 1,237.97. If my labelling of minor wave 2 is wrong or if it does continue lower as a very rare triple zigzag, then it may not move beyond the start of minor wave 1 below 1,237.97.
A new high above 1,303.51 would provide confirmation of the bull wave count. At that stage, the alternate below would be invalidated.
ALTERNATE DAILY ELLIOTT WAVE COUNT
It is still possible that intermediate wave (2) is not over.
Normally, the first large second wave correction within a new trend is very deep, often deeper than the 0.618 Fibonacci ratio. The main wave count sees intermediate wave (2) as very shallow at only 0.19 of intermediate wave (1). This is unusual. And so this alternate must be considered.
If any members have long positions on Gold already it is essential that stops are used in case this alternate unfolds. I have already moved my stop to break even. If the main wave count is right, then I will not have a profit but nor will I have a loss. If this alternate is right, then I can wait until intermediate wave (2) is over to enter long for intermediate wave (3), or possibly enter a small short position to ride down minor wave C.
Intermediate wave (2) may be an expanded flat correction. Minor wave A is a three, minor wave B is a three and a 1.28 length of minor wave A. This is within the normal range of 1 to 1.38.
At 1,183 minor wave C would reach 1.618 the length of minor wave A. This would be the most likely target. If price keeps falling through this first target, then the second target would be at 1,108 where minor wave C would reach 2.618 the length of minor wave A.
Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,046.27.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Upwards movement for Friday closed comfortably above prior resistance at 1,280 on a day with increased volume. This looks like a classic breakout from a consolidation.
After a breakout, often price will turn back down for a correction a few days later to find support at prior resistance. Price has moved lower today. The lower wick of today’s candlestick is slightly above the lower support line about 1,270. Today has slightly lighter volume than the prior downwards day. It looks like the throwback is complete.
ADX is increasing and the +DX line is above the -DX line. ADX is indicating an upwards trend is in place.
ATR today is flattening off, so disagreeing with ADX. The trend is interrupted.
On Balance Volume has come down to test support at the orange line. Because this line is close to horizontal and has been repeatedly tested, it offers reasonable technical significance. This line on OBV is likely to assist to halt the fall in price here.
While the trend is up, the 13 day moving average may be expected to provide support for counter trend corrections.
RSI is not extreme. There is room for price to rise further.
This technical analysis still supports the main Elliott wave count. It does not support the alternate daily Elliott wave count.
This analysis is published @ 08:45 p.m. EST.