Downwards movement was unexpected and invalidated the daily Elliott wave count.
Summary: The trend is still up. Corrections are still an opportunity to join the trend. A new high above 1,340.21 would provide price confirmation that the correction is over. Prior to confirmation, it is possible that price may keep moving lower to 1,291. The long term target remains the same at 1,582.
New updates to this analysis are in bold.
Last weekly chart can be found here.
Grand SuperCycle analysis is here.
DAILY ELLIOTT WAVE COUNT
Intermediate wave (2) is a complete expanded flat correction. It is 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.
I have today considered the possibility that intermediate wave (2) may be continuing as a larger flat correction, a double flat or a double combination. The first structure or wave A of a larger flat would be over at the low labelled the end of intermediate wave (2). Upwards movement from that low would be wave B of a flat or wave X of a double. This upwards movement is now 2.11 the length of the prior wave down labelled intermediate wave (2). When the possible B wave of a flat is longer than twice the length of the possible A wave, then the idea has such a low probability it should be discarded. In this case, the possible B wave is now over twice the length of the possible A wave, so the idea will not be published and is discarded. There is a high probability that intermediate wave (2) is over as labelled.
Minor wave 2 may have been a quick, deep 0.57 zigzag over in just six sessions.
When minor wave 3 is complete, then the following correction for minor wave 4 may be relatively brief and shallow. Intermediate wave (3) may end with a strong blowoff top typical of commodities. This may pull minor wave 4 up forcing it to be over very quickly. For position traders, the target of intermediate wave (3) may be more useful than a target for minor wave 3.
Add a base channel (black lines) to intermediate waves (1) and (2). Draw the first trend line from the low at 1,046.27 on 3rd December, 2015, to the low labelled intermediate wave (2), then place a parallel copy on the high of intermediate wave (1). Intermediate wave (3) should break above resistance at the upper edge of the base channel. When that trend line is breached, then it may offer support. A break above a base channel confirms a third wave up.
Minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,305.59.
At 1,582 intermediate wave (3) would reach 1.618 the length of intermediate wave (1).
Minor wave 3 has begun and may only subdivide as an impulse. At 1,437 minor wave 3 would reach 1.618 the length of minor wave 1. If when price gets to this first target the structure is incomplete, or if price keeps rising through this first target, then the second target would be used. At 1,552 minor wave 3 would reach 2.618 the length of minor wave 1.
Cyan, lilac and now red trend lines are copied over from the weekly chart. These are longer term lines which may offer support / resistance. Weekly and daily charts are on a semi-log scale.
Intermediate wave (1) lasted 71 days (not a Fibonacci number) and intermediate wave (2) lasted 56 days (one more than a Fibonacci 55). Intermediate wave (3) should be expected to be longer in length and duration than intermediate wave (1). An early expectation may be for it to total a Fibonacci 89 days. So far it has lasted 31 days.
MAIN HOURLY ELLIOTT WAVE COUNT
Downwards movement may be a zigzag moving lower for minuette wave (ii). The structure may now be complete. With price just below the 0.618 Fibonacci ratio of minuette wave (i), if this wave count is correct, then downwards movement should be over here.
At 1,440 minuette wave (iii) would reach 1.618 the length of minuette wave (i). If minuette wave (ii) moves any lower, then this target must also move correspondingly lower.
A new high above 1,340.21 would invalidate the alternate below and provide some price confirmation of this wave count. At that stage, some confidence may be had in the upwards trend resuming.
Minuette wave (ii) here subdivides as a regular flat correction. Within
minuette wave (ii), subminuette wave a fits as a double zigzag, a three wave structure. Subminuette wave b fits as a zigzag. Subminuette wave c fits as a five wave impulse, which may now be complete. There is no Fibonacci ratio between subminuette waves a and c.
If price makes a new low below 1,305.59, then the alternate below would be confirmed.
ALTERNATE DAILY ELLIOTT WAVE COUNT
This wave count is identical to the main wave count up to the high labelled minute wave i. Thereafter, it looks at the possibility that minute wave ii is not over and is continuing further as an expanded flat correction.
Within minute wave ii, minuette wave (b) is a 1.34 length of minuette wave (a), nicely within normal range for a B wave within a flat of between 1 to 1.38 the length of the A wave. This looks like a normal expanded flat, which are very common structures.
Add a support line from the start of minor wave 1 to the end of minor wave 2, drawn in cyan. If price gets down that low, then expect strong support at this line.
Minuette wave (c) would be very likely to make at least a slight new low below the end of minuette wave (a) below 1,305.59 to avoid a truncation an a very rare running flat. Minuette wave (c) must subdivide as a five wave structure.
At 1,291 minuette wave (c) would reach 1.618 the length of minuette wave (a). This target is very close to the 0.618 Fibonacci ratio of minute wave i at 1,290, so it has a good probability.
Minute wave ii may not move beyond the start of minute wave i below 1,249.94. This is the risk today to long positions.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
The major difference at the hourly chart level between the two wave counts today is how to see the subdivisions within the wave down labelled subminuette wave i. The main wave count sees this as a three. This alternate sees it as a five. The wave down will fit both ways, so both possibilities must be considered.
If a five down is unfolding, then price must continue lower. Within the five wave structure, subminuette wave iv may not move into subminuette wave i price territory above 1,340.21.
This wave count expects to see one more day of downwards movement. It should exhibit weaker volume and weaker momentum as price finds a low.
Thereafter, the upwards trend should resume.
There is some support for downwards movement today from an increase in volume. However, volume is still lighter than the last upwards day, so this downwards movement still looks corrective. The volume profile is still bullish.
On Balance Volume is coming down close to the upper purple line. If touched this should offer support and halt the fall in price there. There is a little room yet for OBV and for price to fall further.
This downwards movement has resolved RSI being overbought. RSI is returning to neutral.
ADX today is declining indicating the market is no longer trending. ATR disagrees as it is now increasing. ADX has not yet indicated a trend change, so expectations for the trend should be changed from up to neutral at this time.
Stochastics is still just overbought.
Price may find some support about the 13 day moving average. Sometimes this line is overshot during corrections early on in Golds third waves.
This analysis is published @ 10:20 p.m. EST.