More upwards movement was expected for Wednesday’s session to a target at 1,300. Price has moved higher so far reaching 1,296.43.
Summary: The trend is weaker today. A correction does look increasingly likely but pinpointing exactly when and where it will begin is proving very difficult. The target is very slightly changed today to 1,299. One final high is still required to complete the structure.
Trading advice: Any underwater long positions may move stops up to just below the last swing low at 1,278.46. Any positive long positions may take profit if price reaches 1,299. The trend is still up, so no short positions should be entered yet. It is my strong advice today that less experienced members should step aside and wait patiently for clarity. This upwards trend is now very weak, a trend change may come too quickly. Any scalping of the last of this upwards movement is now very risky.
New updates to this analysis are in bold.
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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 now on the hourly chart. When trying to replicate it perfectly on the daily chart this does not work, probably because the daily chart is on a semi-log scale and the hourly is arithmetic. Use the channel on the hourly chart.
Minor wave 1 has now lasted a Fibonacci thirteen days. It is possible that it could be over at today’s high. That would give minor wave 1 a Fibonacci duration which is fairly common for Gold.
HOURLY ELLIOTT WAVE COUNT
Draw the pink channel from the high labelled minute wave i to the higher labelled micro wave 3. Pull a parallel copy down to sit on the low labelled minuette wave (ii). Downwards movement for minute wave iv found support almost right at the lower edge of the channel, so this channel looks about right.
A clear breach of the lower edge of the channel by at least one full hourly candlestick below and not touching the lower edge, preferably by downwards not sideways movement, would provide trend channel indication now of a trend change.
A new low below 1,278.46 could not be a second wave correction within minute wave v, so at that stage minute wave v would have to be over. This would provide some price confidence in a trend change.
At this stage, the structure of minute wave v may be very close to completion. If only minuette waves (i) through to (iv) are complete within it as labelled, then a final wave for minuette wave (v) may complete the structure. At 1,299 now minute wave v would reach equality in length with minute wave i.
Within minor wave 1, minute wave iii is 1.48 short of 4.236 the length of minute wave i.
Within minute wave iii, there are no Fibonacci ratios between minuette waves (i), (iii), and (v).
Ratios within the extension of minuette wave (v) are: there is no Fibonacci ratio between subminuette waves i and iii, subminuette wave v is 1.04 short of 1.618 the length of subminuette wave iii.
Ratios within the extension of subminuette wave v are: micro wave 3 is 1.18 short of 1.618 the length of micro wave 1, and micro wave 5 is 0.67 short of 0.618 the length of micro wave 3.
When a trend change is indicated by a breach of the pink best fit channel and a new low below 1,278.46, then a Fibonacci retracement should be drawn along the entire length of minor wave 1. The 0.382 and 0.618 Fibonacci ratios will be targets for minor wave 2, with the 0.618 Fibonacci ratio favoured.
Minor wave 2 should last at least a week and probably longer. The earliest expectation would be for it to last a Fibonacci 13 or even 21 days. Second wave corrections are often longer lasting than the first waves they correct, particularly the first second wave correction within a new trend. This did not happen for intermediate wave (2) which was 13 days shorter than intermediate wave (1), so it may happen at minor degree.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Overall, volume is rising as price moves higher. Volume today was slightly higher than yesterday, but both days have lighter volume than two days prior. The slight decline in volume for these two days indicates a weakening of this trend.
ADX is today still increasing indicating an upwards trend is intact. ATR may be beginning to agree as today it too is increasing, but this is slight and only one day. It needs more to be clear.
On Balance Volume gave another bullish signal today with a break above the pink trend line. The next trend line is very close and may provide some resistance. A break above the blue line would be another bullish signal from OBV.
RSI is not quite yet overbought. One more day of upwards movement to a new high may bring RSI into overbought territory. If that happens, then a trend change should be expected as very likely there.
There is divergence today between price for the last three days making new highs and Stochastics slightly declining. Stochastics may remain extreme for reasonable periods of time during a trending market. Divergence indicates weakness and will not indicate exactly when and where price will turn.
This analysis is published @ 07:30 p.m. EST.