Yesterday’s analysis expected downwards movement.
Summary: The trend is still up. A multi day correction against the trend is unfolding and still looks incomplete. A target for it to end is either 1,291 or just below 1,249.94. Volume supports a short term bearish view.
New updates to this analysis are in bold.
Last weekly chart can be found here.
Grand SuperCycle analysis is here.
DAILY ELLIOTT WAVE COUNT I
There are two wave counts today presented in order of probability.
Intermediate wave (2) is a complete expanded flat correction. Price from the low labelled intermediate wave (2) has now moved too far upwards to be reasonably considered a continuation of intermediate wave (2). Intermediate wave (3) is very likely to have begun and would reach 1.618 the length of intermediate wave (1) at 1,582.
Intermediate wave (3) may only subdivide as an impulse.
So far minor waves 1 and 2 may be complete within intermediate wave (3). The middle of intermediate wave (3) may have begun and may also only subdivide as an impulse.
Within minor wave 3, minute wave i is complete. Minute wave ii may be continuing as an expanded flat correction. Expanded flats are very common structures.
Within minute wave ii, minuette wave (a) subdivides as a quick three wave structure. Minuette wave (b) subdivides perfectly as a zigzag and is a 1.34 length of minuette wave (a), within the normal range of 1 to 1.38.
It would be highly likely for minuette wave (c) to make at least a slight new low below the end of minuette wave (a) at 1,305.59 to avoid a truncation and a very rare running flat.
At 1,291 minuette wave (c) would reach 1.618 the length of minuette wave (a). This is close to the 0.618 Fibonacci ratio of minute wave i at 1,290, so this is a reasonable target.
Minuette wave (c) may only subdivide as a five wave structure, either an impulse or ending diagonal. So far it looks like the more common impulse.
Minute wave ii may not move beyond the start of minute wave i below 1,249.94.
HOURLY ELLIOTT WAVE COUNT I
The current upwards movement should be expected to be subminuette wave iv while price remains below 1,340.21. If price moves above 1,340.21, then upwards movement should be expected to be micro wave 2. This idea is better shown in the second hourly chart below.
From the high labelled subminuette wave ii to the low labelled subminuete wave iii, a five wave impulse now looks to be complete. This may be subminuette wave iii in its entirety, or the degree of labelling within this impulse may be all moved down one degree and it could be only micro wave 1 within the impulse of subminuette wave iii.
If subminuette wave iii is over at the last low, then it was just 2.14 short of 1.618 the length of subminuette wave i. Subminuette wave iii exhibits stronger momentum than subminuette wave i, and the strongest portion is the middle of the third wave. This labelling is preferred while price remains below 1,340.21 because it has the right look.
Ratios within subminuette wave iii are: there is no Fibonacci ratio between micro waves 3 and 1, and micro wave 5 is 2.32 longer than equality in length with micro wave 1.
If subminuette wave iv is unfolding, then it is likely to exhibit alternation with subminuette wave ii. Subminuette wave ii was a quick very deep 0.99 zigzag. Subminuette wave iv may be a more time consuming and very shallow sideways flat, combination or triangle.
Draw a channel about this downwards impulse using Elliott’s first technique: draw the first trend line from the ends of subminuette waves i to iii, then place a parallel copy on the end of subminuette wave ii. At this time, subminuette wave iv is finding some resistance at the mid line of the channel. It may continue to find resistance here as it moves sideways.
Subminuette wave iv may not move into subminuette wave i price territory above 1,340.21.
Gold often exhibits swift strong fifth waves, typical of commodities. This is particularly true for Gold’s third wave impulses, but also sometimes its C wave impulses. Look out for a potentially strong fifth wave down for subminuette wave v in the next day or so.
DAILY ELLIOTT WAVE COUNT II
My bottom line is that intermediate wave (2) is highly likely to be over, so I must consider all possibilities for how intermediate wave (3) is starting from the low labelled intermediate wave (2).
What if minor wave 2 is not over? It may be continuing as an expanded flat correction. Again, these are very common structures.
The target for intermediate wave (3) is still the same at 1,582.
Minute wave b is a 1.91 length of minute wave a within the expanded flat of minor wave 2. This is longer than the common range for a B wave within a flat of 1 to 1.38, but still within the allowable convention of up to 2 times the length of wave A. However, it is close to the maximum, so this must reduce the probability of this wave count.
Minute wave c of the flat would be very likely to make at least a slight new low below the end of minute wave a at 1,249.94 to avoid a truncation and a very rare running flat. The 0.618 Fibonacci ratio of minor wave 1 at 1,243 would be a reasonable expectation to achieve this.
Minute wave c must subdivide as a five wave structure, either an impulse or an ending diagonal. So far an impulse looks more likely, and it is more common, so it should be expected in the first instance.
Within the impulse of minute wave c, the third wave of minuette wave (iii) looks like it may be extending. Again, this is a very common tendency for third waves, so this should be expected.
The target expects that minor wave 2 may overshoot the lower edge of the base channel about intermediate waves (1) and (2). This is possible, but it does reduce the probability of the target. The base channel is fairly likely to be respected and should offer strong support.
Minor wave 2 may not move beyond the stat of minor wave 1 below 1,200.07.
HOURLY ELLIOTT WAVE COUNT II
Structure and subdivisions at the hourly chart level for wave counts I and II are essentially the same.
This second wave count has different degrees of labelling, but the idea is the same.
So far from the high labelled here minute wave b, there is a 5-3-5 down complete. This may be minuette waves (i), (ii), (iii) with price now in minuette wave (iv). Or it may be minuette waves (i), (ii), and within minuette wave (iii) only subminuette wave i is complete.
If only subminuette wave i is complete, then the current upwards movement may be another second wave correction for subminuette wave ii. It may end about the 0.618 Fibonacci ratio at 1,354.
At 1,283 minuette wave (iii) would reach 2.618 the length of minuette wave (i).
Subminuette wave ii may not move beyond the start of subminuette wave i above 1,374.81.
If price moves sideways and remains below 1,340.21, then the degree of labelling within the impulse labelled subminuette wave i would be moved up one degree. It would be labelled minuette wave (iii). A final fifth wave down would then be expected in the same way as the first hourly chart is labelled.
The third wave count in yesterday’s analysis could be revived, but today it no longer has the right look in terms of proportion on the daily chart, so it is now discarded.
There was some support for downwards movement in the last session. The fall in price was supported by volume, which was stronger than the prior upwards day. This supports both wave counts. The short term volume profile is still bearish.
Overall, volume is declining as price is falling from the last swing high on 6th of July. The mid term volume profile is still bullish, so this downwards movement still looks like a counter trend movement.
ADX is declining indicating the market is not currently trending. ATR is overall flat, mostly in agreement. Downwards movement may be expected to continue until price finds support and Stochastics is oversold at the same time. Price may find support about 1,300. Stochastics is returning from overbought. This approach expects to see several more days of overall downwards movement to about 1,300.
This downwards movement is resolving overbought conditions for RSI and extreme conditions for ADX. If it continues for a further few days, those indicators will again be able to see price rise.
On Balance Volume has come down to the purple trend line. If OBV moves up and away from that line, it would be a small bullish indicator. A new line is added to show very short term resistance. A break above this short steep purple line would be another short term bullish indicator. A break below the purple line that OBV sits on today would be a reasonably strong bearish indicator; reasonably strong because this line is horizontal, long held and tested twice before. A break below this purple line would offer strong support for both Elliott wave counts.
This analysis is published @ 07:19 p.m. EST.