Again, upwards movement was expected and overall did not happen.
The new low for Friday remains above the invalidation point on the hourly Elliott wave chart.
Summary: The target for the main wave count remains at 1,582. Substantial confidence in the main wave count may now be had if price can move above 1,366.87. A new low below 1,310.84 would invalidate the main wave count and confirm an 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 cyan support line in last analysis is not working and so is removed. This is of slight concern for the wave count today.
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.
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
Overall, price moved sideways in an increased range for Friday’s session. Friday completed a higher high than Thursday, and a lower low.
Minuette wave (ii) fits as a double combination: zigzag – X – expanded flat correction. Subminuette wave y ended lower than subminuette wave w; the correction has a slight downwards slope. Because subminuette wave x is relatively deep, and micro wave B of subminuette wave y is very deep, the correction still has somewhat a sideways look to it. This is reasonable for a combination.
What does look clear short term is that the wave up labelled minuette wave (i) looks like and fits very well as an impulse and the wave down labelled minuette wave (ii) is more choppy and overlapping, so it looks more corrective.
A cyan support line is drawn short term as shown. Price may find support about this line if this wave count is correct.
If minuette wave (ii) continues any further, then it may not move beyond the start of minuette wave (i) below 1,330.01.
At 1,403 minuette wave (iii) would reach 2.618 the length of minuette wave (i). If price keeps rising through this first target, or if when it gets there the structure is incomplete, the second target would be used. At 1,446 minuette wave (iii) would reach 4.236 the length of minuette wave (i).
The target for minor wave 3 remains the same. At 1,513 minor wave 3 would reach 1.618 the length of minor wave 1.
The short term volume profile for Friday’s movement looks more bullish than bearish. Volume increased as price moved higher to the high for Friday. The rise in price was supported by volume. Thereafter, as price fell to the low for Friday overall volume declined. The fall in price was not supported by volume. There is some small support for this wave count from the hourly volume profile here.
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.
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.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
In order to make a reasonable judgement of each Elliott wave count, it is at this stage important to see how each wave count sees recent structure at the hourly chart level.
For the subdivisions to fit best minute wave ii may be a completed zigzag with a truncated C wave for minuette wave (c) of 1.24. The truncation is not too large to be acceptable, but it is not small either. This is possible, but it does necessarily reduce the probability of this wave count.
When markets open on Monday a new high above 1,355.12 would invalidate this alternate at the hourly chart level, that would add a little confidence to the main wave count.
A new low below 1,330.01 would add some confidence to this alternate. A new low below 1,310.84 would confirm it.
This week completes a lower high and a lower low. The week closed slightly above the open and the candlestick is green but not by much. Overall, this week looks corrective. A slight increase for a green week gives slight support to a bullish wave count.
If the lower purple line on On Balance Volume is drawn carefully across 7th of March and 18th of April, then it was touched at the end of this week. This trend line has been weakened with OBV breaking below and then returning above it, but it still has some technical significance. A break below the purple line would be a bearish signal but a relatively weak one. A break above the green line would be a bullish signal.
RSI is not extreme. There is room for price to rise or fall.
There is a large discrepancy for the volume data for Friday between StockCharts and COMEX (seen on the main daily Elliott wave count).
COMEX data shows volume for the upwards day of 10th of August was the highest day this week at 30.4K. Thereafter, the downwards day of 11th of August at 19.2K and the downwards day of 12th of August at 14.6K. COMEX volume data is bullish: the rise in price early in the week was supported by volume and the fall in price down to Friday was not supported by volume.
StockCharts data shows increased volume for 10th of August; the rise in price was also supported by volume. But thereafter the fall in price for Friday shows the strongest volume for the whole week. The fall in price had more support from volume. StockCharts volume data is bearish.
On Balance Volume may give some clues as to which direction price is more likely to move next.
At the end of this week, OBV is finding support at the yellow trend line. In the first instance, this line should be expected to provide support and initiate a bounce from price here. At the end of this week, there is some small divergence with price and OBV between the lows of 8th of August and 12th of August: OBV has made a lower low but price has made a slightly higher low. This divergence is bullish and indicates weakness to the downwards movement from price.
OBV tends to work better with trend lines than it does with divergence, but both will be noted.
RSI is neutral. There is plenty of room for price to rise or fall here.
ADX today is declining, indicating the market is not trending. ATR is increasing, but with the increase for only one day this is not yet very clear. Overall, it should be expected that this market is still range bound and consolidating. Price is range bound with resistance about 1,375 and support about 1,310. The bottom line is a breakout has not yet occurred, and only a break above or below these price points would be a reliable indication of the next direction for price.
During this sideways movement, it is still the upwards day of 8th of July which has strongest volume. This suggests an upwards breakout is more likely than downwards. This trick usually works for Gold (usually is not the same as always, just more often than not).
On balance of probability the main wave count is still slightly more supported by classic technical analysis than the alternate, but there is enough bearishness for the alternate to be a necessary addition.
This analysis is published @ 05:40 a.m. EST on 13th August, 2016.