Upwards movement was expected but did not happen.
Price moved lower, remaining above the invalidation point on the hourly Elliott wave count.
Summary: The trend is up. The target remains at 1,582. Further and substantial confidence may now be had in the trend and targets if price can move above 1,366.87. A new low below 1,310.84 would invalidate the main wave count and confirm a new alternate. At that stage, a target for downwards movement to end would be 1,279.
New updates to this analysis are in bold.
Last weekly charts, and a more bearish weekly alternate, are here.
Grand SuperCycle analysis is here.
DAILY ELLIOTT WAVE COUNT
Primary wave 2 is a complete expanded flat correction. Price from the low labelled primary wave 2 has now moved too far upwards to be reasonably considered a continuation of primary wave 2. Primary wave 3 is very likely to have begun and would reach 1.618 the length of primary wave 1 at 1,582.
Primary wave 3 may only subdivide as an impulse.
So far intermediate waves (1) and (2) may be complete within primary wave 3. The middle of primary wave 3 may have begun and may also only subdivide as an impulse.
Within intermediate wave (3), the end of minor wave 1 is moved up to the last high. This fits on the hourly chart although it looks odd here on the daily chart. There was a small fourth wave correction up at the end of minor wave 1 and it subdivides on the hourly chart as an impulse. Minor wave 2 may be a complete zigzag, also subdividing as a zigzag on the hourly chart. If minor wave 2 is over, it would be 0.50 the depth of minor wave 1.
No second wave correction may move beyond the start of its first wave below 1,310.84 within minor wave 3.
At 1,437 intermediate wave (3) would reach 1.618 the length of intermediate wave (1). If price keeps going upwards through this first target, or if it gets there and the structure is incomplete, then the next target would be at 1,552 where intermediate wave (3) would reach 2.618 the length of intermediate wave (1).
The support line in cyan is adjusted today. Draw it from the start of intermediate wave (1) to the end of intermediate wave (2). Downwards corrections may bounce upwards from about this support line.
There may now be four overlapping first and second waves complete: primary, intermediate, minor and now minute. This wave count expects to see an increase in upwards momentum beginning this week.
A new high above 1,366.87 would invalidate the new alternate wave count below and provide price confirmation of this main wave count.
Primary wave 1 lasted 14 weeks and primary wave 2 lasted 12 weeks. Primary wave 3 should be longer in both price and time as it should be extended. It may be about a Fibonacci 34 weeks. So far it has lasted ten.
HOURLY ELLIOTT WAVE COUNT
It looks like price is still finding some support about the cyan support line, not perfectly but close to it.
Downwards movement may be a continuation of minuette wave (ii) as a deeper zigzag. The channel drawn about it is redrawn. If price breaks above this channel, it would now be a very strong indication that minuette wave (ii) is complete and minuette wave (iii) upwards is underway.
At 1,405 minuette wave (iii) would reach 2.618 the length of minuette wave (i). If price gets to this first target and the structure is incomplete, or if price keeps rising through the first target, then the second target would be used. At 1,448 minuette wave (iii) would reach 4.236 the length of minuette wave (i). For the middle of a big extended third wave this Fibonacci ratio is entirely reasonable.
Minuette wave (iii) may only subdivide as an impulse. Momentum and volume should increase during the middle of it, and may continue to increase further. It is very likely to exhibit a strong extended fifth wave for subminuette wave v, ending with a blowoff top.
Minuette wave (iv) may be a brief and shallow correction; It may be over within 24 hours and not show up on the daily chart as a red candlestick or doji.
It is possible that minuette wave (ii) may yet continue lower while there is no confirmation that it is over at this point. Minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,330.01.
THIRD WAVE EXAMPLE – DAILY CHART
In discussing the curved look to Gold’s impulses, particularly for its third waves, here is an example.
Within primary wave 1, the third wave of minor wave 3 had a strong curved look to it. The impulse begins more slowly and has deep and relatively time consuming second wave corrections: Minor wave 2 was 0.68 of minor wave 1, minute wave ii was 0.76 of minute wave i, minuette wave (ii) was 0.56 of minuette wave (i), and subminuette wave ii was 0.64 of subminuette wave i.
The curved look comes from the disproportion between second and fourth wave corrections within the impulse. Here, minute wave ii lasted 4 days and shows clearly on the daily chart yet minute wave iv was over within one day and does not show up with any red candlesticks or doji on the daily chart.
Momentum builds towards the middle of the impulse, continuing to build further during the fifth wave and ending in a blowoff top. This is typical of Gold and all commodities.
This tendency to blowoff tops and curved impulses is particularly prevalent for Gold’s third waves.
ALTERNATE DAILY ELLIOTT WAVE COUNT
This wave count is identical to the main wave count up to the end of primary wave 2. Thereafter, what if only intermediate wave (1) ended at the last high?
This movement will fit as a five wave impulse, although it does not have a very good look on the daily chart. This reduces the probability of this wave count.
If intermediate wave (1) was over at the last high, then it may have lasted 27 days. So far intermediate wave (2) may have taken 25 days and would still be incomplete. The proportions of this part of the wave count look slightly better than the main wave count.
There is a problem now with structure on the hourly chart within minor wave C. Minute wave i would have to be complete. It will fit on the hourly chart, but it does not have a good look as a five and looks better as a three on the hourly and daily chart levels. This slightly reduces the probability of this wave count.
Within minor wave C, minute wave ii may not move beyond the start of minute wave i above 1,366.87.
Minor wave C must be a five wave structure. So far within it minute waves i and ii would be complete. Minute wave iii downwards should be underway. It is concerning for this wave count today that the small red daily candlestick comes with a decrease in volume. A third wave down should be supported by volume. Although price did move lower today, this wave count is not supported.
At 1,279 minor wave C would reach 1.618 the length of minor wave A. Price may end downwards movement when it finds support at the lower edge of the maroon base channel drawn about primary waves 1 and 2.
Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,200.07.
The week before last completed a bullish engulfing candlestick pattern supported by stronger volume than the prior downwards week. Last week made a new high, then completed a red candlestick on lighter volume. Overall, the fall in price last week is not supported by volume at the weekly chart level. Last week looks to more likely be a corrective movement than a new trend.
On Balance Volume is still relatively bullish above the purple trend line, which is redrawn at the end of last week. A break below the purple line would be bearish. A break above the green line would be bullish.
RSI is not extreme. There is room for price to rise or fall.
From the last high on 2nd of August, volume increased as price fell. The fall in price was supported by volume.
Price moved higher on increased volume yesterday and today price moved lower on decreased volume. This short term volume profile is now bullish and supports the main Elliott wave count over the alternate. It looks today like price is finding support about the cyan trend line.
It looks like price is range bound between resistance about 1,375 and support about 1,305. ADX has been mostly declining since 12th of July and price has overall moved sideways within this range. ATR has also been declining during this period, This supports ADX in expecting the market is consolidating. Volume is declining as price moves sideways.
ADX today has very slightly increased for the second day in a row, and it may now again be indicating an upwards trend may be returning. With ATR still declining though, this is not as clear as it could be. If ATR turns upwards, then some reasonable confidence in an upwards trend may be had.
It is the upwards day of 8th of July, during this big consolidation, that has strongest volume suggesting an upwards breakout is more likely than downwards.
It should be expected during a consolidation that price will swing from support to resistance and back again. Stochastics may be used to indicate when one swing ends and the next begins. At this stage, Stochastics is returning from overbought and is now about neutral. A downwards swing may be expected to continue until Stochastics reaches oversold and price reaches support about 1,305 at the same time.
Price swings during a consolidation do not move in straight lines, and support or resistance may be overshot yet price returns back to within the consolidation. This is one reason why consolidations are so difficult to trade. The final expected swing never eventuates, as finally price breaks out of the consolidation. This is another reason why consolidating markets are difficult and more risky to trade than trending markets.
RSI is close to neutral. There is room for price to rise or fall.
Trend lines on On Balance Volume are redrawn. A break above the purple line would be a bullish signal. A break below the yellow line would be a bearish signal.
This analysis is published @ 07:53 p.m. EST.