The main Elliott wave count expected upwards movement but the target at 1,267 was inadequate.
A new high above 1,269.07 has invalidated the alternate Elliott wave count at the daily chart level, leaving only one wave count now. We have some clarity for the bigger picture for Gold.
Summary: The target for upwards movement to end is now at 1,277. If price keeps rising through this target, then the next target would be at 1,289. When the channel on the hourly chart is breached by downwards movement, then expect a multi day correction has begun for a second wave. It is possible that the expected correction may not materialise soon though (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. 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.
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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).
MAIN HOURLY ELLIOTT WAVE COUNT
It is clear that with price continuing higher minor wave 1 was not over at the last target.
The end of minute wave iii may have been complete at the last high. The middle of minute wave iii so far has strongest momentum. This wave count still fits with MACD.
There is still 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 1,277 now minute wave v would reach equality in length with minute wave iii. If this target is reached and price keeps going up, then the next likely ratio for minute wave v would be to reach 1.618 the length of minute wave i at 1,289.
So far within minor wave 1 the strongest extension is the third wave. So far there is double bearish divergence at the hourly chart level with price and MACD (gold lines on price and MACD). The fifth wave so far 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 based upon my experience, and today it is supported by declining volume, declining momentum, declining ATR, and price sitting within the lower half of the pink channel.
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 sage, draw a Fibonacci retracement along the length of minor wave 1 (on the hourly chart on an arithmetic scale). Use the 0.382 and 0.618 Fibonacci ratios as targets for minor wave 2, favouring the 0.618 Fibonacci ratio.
So far minor wave 1 has lasted nine days. It may not exhibit a Fibonacci ratio or it may continue a further four 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.
Another upwards day comes with a decline in volume. There is less support today for the rise in price, and it looks like this upwards trend may be weakening today.
ADX is still very slightly increasing indicating an upwards trend is now in place. ATR today still disagrees as it declined today. Some disagreement between these two trending indicators may be expected in the early stages of a new trend.
On Balance Volume is giving another weak bullish signal today with a break above the short green trend line. A break below either of the horizontal yellow lines would be a strong bearish signal now from OBV. OBV should find support particularly at the lower yellow line. If the correction that is expected for minor wave 2 unfolds, then it may end when OBV comes to touch the lower horizontal yellow line.
RSI exhibits no divergence today with price to indicate any weakness. RSI is not yet extreme, so there is still room for price to rise further.
Stochastics is just beginning to enter overbought, so the rise in price may end soon.
This analysis is published @ 07:31 p.m. EST.