Upwards movement continued as per the alternate hourly Elliott wave count.
The channel on the hourly chart remains intact.
Summary: At least one more high is now required to complete the structure. The target is at 1,289. If price keeps going up, then the next target is at 1,297. Upwards movement continues to show weakness indicating this trend is old and will correct.
Trading advice: It is possible that the expected correction may not materialise soon (this has happened before), so a buy the dips approach may be used for more adventurous traders. Each time price touches the lower edge of the channel a long position may be entered with a stop close by just below the lower edge of the channel. If the trend continues for some time, such a long position should become profitable quickly; as soon as the position is profitable and price moves up and away from the channel, move the stop to break even to limit risk. If the channel is breached and the position is negative, the loss should be cut quickly short. At this stage, profits may be taken if price reaches 1,289 or positions may be left to run until the channel is breached. At this stage, stops may be set at just below the channel which is now about 1,280. As always, invest no more than 3-5% of equity on any one trade and always use a stop loss.
New updates to this analysis are in bold.
To see last weekly charts click here.
DAILY ELLIOTT WAVE COUNT
Intermediate wave (2) may be a complete expanded flat correction. It would be a shallow 0.350 correction of intermediate wave (1) lasting 56 days, just one more than a Fibonacci 55. There is no Fibonacci ratio between minor waves A and C. Minor wave C is a complete impulse.
Within intermediate wave (3), no second wave correction may move beyond the start of its first wave below 1,200.07.
When minor wave 1 is complete, then a following second wave correction should unfold and last about one to two weeks. If this wave count is correct, then the upcoming second wave correction may offer an opportunity to join the upwards trend at a good price. If minor wave 2 is deep, then it may find support at the lilac trend line (copied over from the weekly chart). Weekly and daily charts are always on a semi-log scale.
At 1,582 intermediate wave (3) would reach 1.618 the length of intermediate wave (1).
The pink channel is drawn on the daily chart to show exactly how it is drawn. Draw the first trend line from the highs labelled minute waves i to minuette wave (iii), then pull a parallel copy down to sit along all the lows of the last few days. Copy this over carefully to the hourly chart which should be on an arithmetic scale. The lower edge of the channel is perfectly showing where price is finding support for a few days now, so a breach would be a good indication of a trend change for a pullback. This channel is steep, so it should not be expected to hold for much longer.
MAIN HOURLY ELLIOTT WAVE COUNT
The middle of minute wave iii so far has strongest momentum. This wave count still fits with MACD.
There is no Fibonacci ratio between minute waves i and iii. It is still more likely that minute wave v will exhibit a Fibonacci ratio to either of minute waves i or iii. At 1,289 minute wave v would reach 1.618 the length of minute wave i.
If price keeps going up through this target, then the next target would be about 1,297 where minute wave v would reach 0.618 the length of minute wave iii. This target has a lower probability though because a ratio between minute waves v and i is more likely than a ratio between minute waves v and iii.
So far within minor wave 1 the strongest extension is the third wave. There is double bearish divergence today at the hourly chart level with price and MACD. The fifth wave still does not look like it will be a swift strong extension.
Gold, like all commodities, has a tendency to exhibit strong fifth waves. This tendency commonly turns up at the end of its third wave impulses, not so often at the end of its first wave impulses. It is when price is nearing the end of minor wave 3 within intermediate wave (3) that we may see a blowoff top in Gold, and possibly also the end of intermediate wave (3). For now price is early on in this upwards trend. Gold often will exhibit one to a few more time consuming corrections early on, so that the whole movement has a curved look.
Although it is possible that members may miss out on joining a good upwards trend at this stage, it would still be more likely that minor wave 2 will turn up sooner rather than later and will offer a good entry point. This statement is still based on experience but today is no longer supported by volume.
When the channel is breached by a full hourly candlestick below and not touching the lower edge, preferably by clear downwards (not sideways) movement, then the channel shall be indicating a short term trend change for Gold. At that stage, the 0.618 Fibonacci ratio would be a reasonable target for minor wave 2.
So far minor wave 1 has lasted eleven days. It may not exhibit a Fibonacci ratio or it may continue a further two days to total a Fibonacci thirteen. Minor wave 2 may be expected to last about a Fibonacci five or eight days, or possibly longer.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Volume cannot be said to be overall declining today. Volume today is still lighter than the first upwards day of this trend on 3rd June, but price has now been rising for three days on increasing volume. The rise in price is supported by volume.
ADX still indicates an upwards trend is in place.
ATR still disagrees though; it is declining. This indicates some weakness to the upwards trend. Each day the range by which the bulls are able to push up price is declining. Three is still a stalled candlestick pattern in place.
On Balance Volume is bullish. The next trend line to provide resistance is some distance away. There is room yet for price to rise further.
RSI is not yet overbought. There is further room yet for price to rise.
Stochastics is just now entering overbought, but his oscillator may remain extreme during trending periods. The 13 day moving average should be expected to provide support while this trend continues.
This analysis is published @ 06:51 p.m. EST.