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Upwards movement was expected as most likely from the main Elliott wave count. The alternate expected a little downwards movement.

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 1,463, 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.


Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

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. When intermediate wave (3) moves towards the middle, it 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.

Within minute wave iii, no second wave correction may move beyond its start below 1,305.59.

At 1,582 intermediate wave (3) would reach 1.618 the length of intermediate 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 29 days.


Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

This was the alternate wave count yesterday. It is now the main wave count. The red daily candlestick for Thursday’s session may have been minuette wave (ii). Because minute wave ii one degree higher was quick lasting only two days, and relatively shallow at 0.48, then minuette wave (ii) should be over more quickly and is also likely to be shallow. This is today the main wave count for this reason.

Minuette wave (ii) may have been quick lasting only one day, and shallow at only 0.35 of minuette wave (i).

At 1,463 minuette wave (iii) would reach 1.618 the length of minuette wave (i). This target makes the target for minor wave 3 on the daily chart irrelevant. Minor wave 3 may not exhibit a Fibonacci ratio to minor wave 1.

This wave count now expects to see a the middle of a big third wave up begin here. Upwards momentum should increase strongly, ending with a blowoff top at the end of minor wave 3 and possibly also at minute wave iii.

Within minuette wave (iii), no second wave correction may move beyond the start of its first wave below 1,350.96. A new low below this point would invalidate this main wave count and confirm the alternate below.


Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

It is possible that minuette wave (ii) is not over. It may be deeper and longer lasting than the main wave count expects. This is less likely though because it would see minuette wave (ii) longer lasting and probably also deeper than minute wave ii one degree higher.

Low probability does not mean no probability. This alternate wave count illustrates the short term risk to long positions today.

The most likely structure for minuette wave (ii) to continue as would be a double zigzag. The most likely point for it to end, if it deepens, would be the 0.618 Fibonacci ratio at 1,332.

Minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,305.59.



Gold Daily 2016
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There is resistance from a prior area of congestion about 1,375. This is about where price has turned to complete a red daily candlestick.

Volume has been increasing as price has been rising. The rise in price is supported by volume. Price today moved lower on lighter volume; downwards movement looks so far corrective.

On Balance Volume remains bullish above the purple line. If price moves lower, then it may end when OBV comes to find support at that line.

RSI is just entering overbought and shows no divergence with price at the last high. RSI can remain extreme for several days during a trending market. Divergence would indicate weakness in the trend. There is no weakness seen today.

ADX still indicates there is an upwards trend in place. It is now extreme. Looking back over Gold’s strong third wave movements, ADX can remain extreme for several days towards the end of a third wave.

ATR is still declining due to the strong upwards day of 24th of June being part of this average. Overall, ATR is still reasonable for a third wave.

Stochastics still shows divergence with price at the last two swing highs. This divergence may be resolved by one day of downwards movement, but it may also require a little more.

While the market is trending, it should be expected that the 13 day moving average will provide support for deeper corrections along the way up.

This analysis is published @ 07:41 p.m. EST.