Upwards movement was expected for Monday’s session, which is what happened although price moved higher in a very small range.
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. Prior to that, a new low below 1,330.01 would shift probability from the main to the alternate wave count. 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).
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
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.
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 upwards movement for Monday’s session, on the five minute chart, subdivides so far 5-3-5. This may be micro waves 1-2 and submicro wave (1) upwards. Submicro wave (2) may not move beyond the start of submicro wave (1) below 1,336.02.
The invalidation point will remain at 1,330.01. It is still possible that minuette wave (ii) is not over and may move a little lower. The invalidation point reflects this possibility. Minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,330.01.
The short term volume profile for Friday and Monday looks more bullish than bearish. There is support for upwards movement in price. The fall at the end of Monday’s session may not be complete yet; volume is lighter than the last upwards hours but is still increasing as price falls.
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 28 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.
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.
Upwards movement for Monday fits as a 5-3-5 zigzag. This may be minuette wave (ii) complete, ending just beyond the 0.382 Fibonacci ratio of minuette wave (i). This alternate wave count now expects to see a third wave down at two degrees develop. If it is correct, it should be confirmed within the next 24 hours.
A new low below 1,336.02 short term would add a little confidence to this alternate. It would still require confirmation with a new low below 1,310.84 before a reasonable level of confidence may be had in the target.
Last 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, last 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 last 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 still a large and continuing discrepancy between StockCharts volume data and COMEX volume data.
The short term volume profile from StockCharts is bearish. This supports the alternate Elliott wave count. Volume increased as price fell for the end of last week. Now a small green candlestick for Monday’s session comes with much lighter volume. The rise in price on Monday was not supported by volume. This short term volume profile strongly suggests more downwards movement ahead, at least for a few days. Price may find strong support about the next horizontal trend line at 1,310 – 1,305.
The short term volume profile from COMEX (seen on the main daily Elliott wave count) is bullish. This supports the main Elliott wave count. The fall of 5th August was 17.7K and the next upwards day of 8th August was 18.1K. Volume was essentially flat for the next upwards day of 9th August at 18K, and the last upwards day has the strongest recent volume at 30.4K. Thereafter, two downwards days of 11th August and 12th August have volume totals of 19.2K and 19.4K, respectively. There was some slight support for the fall in price on the second day, but it remained much lighter than the last upwards upwards day. Now COMEX data for Monday 15th August has a green daily candlestick with increased volume at 31.2K. The rise in price is supported by volume.
What is clearest from COMEX data is the two strongest days are this upwards day for 15th August and the last upwards day of 10th August. This short term volume profile strongly suggests more upwards movement ahead.
The volume profiles are polar opposite, making a judgement here impossible.
Please manage risk to any long positions carefully. Move stops to break even, if possible, or higher to protect any profits on older positions, if possible.
Price has overall moved upwards for Monday’s session. The range is very small for an inside day.
The cyan trend line was breached; price closed below it on Friday. Now that line appears to be providing resistance for a throwback. This would strongly also suggest more downwards movement from here, so this supports the alternate Elliott wave count.
Bollinger Bands have been contracting and remaining about the same level since 22nd July. Price ended the last upwards wave on 6th July and thereafter entered a sideways consolidation. Resistance is about 1,375 and support is about 1,305 – 1,310. During this consolidation, the BBs are contracting and volume is slowly declining. The upwards day of 8th of July remains the strongest day suggesting an upwards breakout is more likely than downwards. This offers small support to the main Elliott wave count.
On Balance Volume may assist to indicate where volume profiles between StockCharts and COMEX are opposite. OBV has today bounced up just above the yellow line. This line should be expected to offer support and to assist to halt the fall in price here.
RSI is very close to neutral. There is room for price to rise or fall.
ADX is still declining as is ATR. Both these indicators suggest a consolidating market at this time.
Stochastics is returning from overbought and price is returning from resistance. A continuation of a downwards swing should be expected for a consolidating market, only to end when price finds support about 1,310 – 1,305 and Stochastics is oversold at the same time. Trading range bound markets is more risky than trading trending markets. Only the most experienced traders should attempt it. Others should exercise patience and wait for a trend to return. The final expected swing never occurs; this is when price breaks out of the range and begins trending.
This analysis is published @ 06:00 p.m. EST.