A correction was expected to end at a target zone given at 1,337 – 1,339. Price moved lower to reach 1,338.21 and turned there to continue upwards, exactly as expected.
Summary: The trend is up. Corrections present an opportunity to join the trend. Expect upwards momentum to increase in coming weeks. The target for this third wave to end remains at 1,582. The middle of it may end about 1,437, but the correction after the middle may be brief and shallow.
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.
Minor wave 2 may have been a quick, deep 0.57 zigzag over in just six sessions. If minor wave 3 has begun there, then at 1,437 it would reach 1.618 the length of minor wave 1.
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). Along the way up, downwards corrections should find support at the lower edge of the base channel, if they get that low. At this stage, it looks like corrections are shallow and may not reach back down to the base channel.
Minute wave ii may not move beyond the start of minute wave i below 1,249.94.
At 1,582 intermediate wave (3) would reach 1.618 the length of intermediate wave (1).
Adjust the support line, drawn here in cyan. At this stage, price may now continue to find support here as a third wave up accelerates towards a blowoff top. The top is still at least days away (or maybe weeks).
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 27 days.
MAIN HOURLY ELLIOTT WAVE COUNT
The target for minor wave 3 remains the same. At 1,437 minor wave 3 would reach 1.618 the length of minor wave 1.
If minute wave ii was very quick as labelled, then minute wave iv may be quicker still. A target is not given for minute wave iii because the following correction for minute wave iv may be too quick to show up on the daily chart.
Within minuette wave (iii), the upcoming small correction for subminuette wave iv may not move into subminuette wave i price territory below 1,352.46.
This main wave count sees minuette wave (i) over at the recent high yesterday. This gives minuette wave (i) a curved look because subminuette wave iii is quicker than subminuette wave ii. This is very typical of Gold’s impulses, and so this main wave count has a higher probability than the alternate below.
This wave count now sees a series of five first and second waves complete. The middle of a big third wave would be approaching. It should exhibit an increase in upwards momentum and an increase in volume. Targets for low degree third waves to end are not given because if this third wave behaves as Gold’s third waves typically do, then price may barely hesitate at any targets. The upcoming fourth wave corrections for fourth waves up to and including minute degree may be very quick and shallow.
If price comes down again to the cyan trend line, then it may find support there. Each time price corrects it presents an opportunity to join the trend.
Look out for surprises to the upside for this wave count.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
This alternate hourly wave count is new. It looks at minuette wave (i) ending more recently and having a more textbook look, rather than the curved look more typical of Gold.
If a larger more time consuming correction develops about here, then at this stage it may be minuette wave (ii). It may end about the 0.382 Fibonacci ratio at 1,345. At this stage, it may be more likely shallow than deep as the middle of a big third wave pulls it upwards.
Minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,305.59. At this stage, this is now the final risk to long positions.
Now price has moved upwards for four days in a row to complete green daily candlesticks on increasing volume. The rise in price is supported by volume. There is no longer any concern over the volume profile. This supports the daily and main hourly Elliott wave count.
ADX is increasing and the +DX line is above the -DX line indicating an upwards trend is in place. This trend is becoming extreme with ADX now over 30. However, ADX can remain extreme for a reasonable period of time during the end of Gold’s impulses (in my experience, only above 40 would there be any serious cause for concern).
ATR still disagrees with ADX today; it is still declining. The decline is slowing and range is still high at 23 though. If ATR shows an increase in the next few days, then more confidence may be had in an upwards trend. At this stage, the disagreement between ADX and ATR warrants some caution. Manage risk carefully in case a deeper correction is to unfold here.
On Balance Volume has given a strong bullish signal today with a break above two resistance lines in purple. On Balance Volume is now free to continue rising. There are no further resistance lines found at this time.
RSI is not yet extreme and will exhibit no divergence with price when the next daily candlestick which has made a new high (not yet shown in StockCharts data) is considered. RSI can remain extreme for a period of time during a trending market. When it shows divergence between price at swing highs, then it may be indicating exhaustion.
Price may find support at the 13 day moving average as the upwards trend continues.
Divergence with price and Stochastics indicates some exhaustion to upwards movement, but this is not always very reliable. It is a weak bearish signal indicating the alternate Elliott wave count may be correct.
This analysis is published @ 11:31 p.m. EST.