Upwards movement was expected.
Price moved sideways in a narrow range, but did make a higher high and a higher low from the prior session.
Summary: In the short term, a counter trend movement should end within the next 24 hours a little below 1,346.27 but not below 1,340.01. Thereafter, price should turn upwards. 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 1,334.06 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.
With overall sideways movement now for the last seven days, it looks entirely possible that minute wave ii may not be over. Sideways movement may be a corrective structure for an X wave to join two zigzags in a double. Minute wave ii may yet move a little lower to complete as a double zigzag.
Minute wave ii may not move beyond the start of minute wave i below 1,310.84. This is the final risk to any long positions entered here or which members may still be holding.
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 six overlapping first and second waves complete: primary, intermediate, minor, minute, minuette and subminuette. This wave count expects to see an increase in upwards momentum. The increase in upwards momentum should be imminent.
A new high above 1,366.87 would invalidate the 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.
FIRST HOURLY ELLIOTT WAVE COUNT
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 structure of subminuette wave ii is problematic here, so a second hourly chart is provided. If subminuette wave ii is over, then it may subdivide as a double combination: zigzag – X – flat. Within the zigzag of micro wave W, the subdivisions of submicro wave (C) do not fit well. This will fit as a five wave impulse on the five minute chart, but it looks strongly like a three wave movement on the hourly chart. This is problematic.
However, it still looks most likely that subminuette wave ii is complete. The proportion between subminuette wave i lasting 41 hours and subminuette wave ii lasting 30 hours looks good, and the depth at over the 0.618 Fibonacci ratio sees this small correction most likely over here.
Within subminuette wave iii, micro wave 1 fits well as an impulse and micro wave 2 looks to be incomplete. Micro wave 2 may move a little lower as a double zigzag. Submicro wave (Y) should end below the end of submicro wave (W) at 1,346.27, so that it deepens the correction and achieves the purpose for a second zigzag in a double. Micro wave 2 may not move beyond the start of micro wave 1 below 1,340.01.
If price does move below 1,340.01, it should not be by much or for long. If 1,340.01 is breached, then use the second hourly wave count below.
A new high above 1,356.85 would see the second hourly wave count invalidated and provide confidence in this first hourly wave count.
SECOND HOURLY ELLIOTT WAVE COUNT
It is also possible that subminuette wave ii is an incomplete zigzag.
Within this structure, micro wave A subdivides as a five wave impulse. Micro wave B may not move beyond the start of micro wave A above 1,356.85.
Micro wave B may be a complete expanded flat correction. Micro wave C downwards must subdivide as a five wave structure and is very likely to make at least a slight new low below the end of micro wave A at 1,341.45 to avoid a truncation.
When micro wave C is complete, then a trend change and a new strong upwards wave should begin for Gold. If price gets down low enough, it should find strong support at the cyan trend line.
Subminuette wave ii may not move beyond the start of subminuette wave i below 1,334.06.
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 31 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.
Within minute wave iii, no second wave correction may move beyond its start above 1,356.85. A new high above this point at this stage would invalidate this alternate at the hourly chart level, but not the daily chart level. That would add confidence to the main wave count.
Minor wave C must subdivide as a five wave structure. If price makes a new low below 1,334.06, then the probability of this alternate would increase. It would be confirmed with a new low below 1,310.84.
If price moves below 1,310.84, then expect more downwards movement for a deeper pullback to end about 1,279. Look also for price to find support at the maroon channel on the daily chart. The target at 1,279 may be a little too low; the maroon trend line may stop price before it reaches 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.
A small sideways consolidation within the larger consolidation is forming, and it has a slight upwards bias. This should not technically be read as a flag though; it is not a pattern within a steep downwards trend.
As price is moving sideways since about 7th of July, volume is still overall declining. During this time, it is still the upwards day of 8th of July that has strongest volume suggesting an upwards breakout is more likely than downwards. The next strongest day is a downwards day of 25th of July, and after that another upwards day of 21st of July. With two of the three strongest days upwards days but one a still strong downwards day, the direction indicated for a breakout by volume is not as clear as it could be.
Price today completed a green daily candlestick with a higher high and a higher low than the day before. This comes with lighter volume though; the rise in price was not supported by volume. A little more downwards movement may be expected; this supports the hourly Elliott wave counts short term.
Price broke below the longer term cyan trend line and is now finding some resistance there.
The purple resistance line on On Balance Volume has been redrawn today. It is providing some resistance today. The yellow line continues to provide support. A breakout by OBV may precede a breakout by price, so OBV may indicate a direction for price. The breakout should be close with these trend lines quickly converging now, so OBV should be watched carefully.
Price needs to break above resistance at 1,375 or below support at 1,310 – 1,305 on a day with increased volume for a breakout to be indicated and the next trend to begin. That has not happened yet.
RSI is just above neutral. There is plenty of room for price to rise or fall.
ADX today is again very slightly increasing. With a very slight upwards bias to price over the last eight days, a small weak upwards trend may be indicated.
ATR is still declining, indicating the market is not trending. It does look fairly clear that the market is range bound, with price bound by resistance and support lines, and not yet trending despite what ADX is saying today. The signal from ADX may be an early warning of an upwards breakout.
Stochastics is neutral. There is very slight bullish divergence between Stochastics and price from the low of 9th of August to the low of 17th of August: Stochastics made a slightly lower low while price made a slightly higher low. This divergence is weak and sometimes unreliable; it is noted but should not be given much weight in this analysis.
A range bound trading approach to this market at this time would still expect a continuation overall of a downwards swing to end only when price finds support about 1,310 – 1,305 and Stochastics reaches oversold at the same time. However, with this consolidation now very mature a breakout should be very close. The final expected swing within a consolidation sometimes does not arrive as price breaks out. That may be the case at this stage. The safest approach to this market at this time would be to wait for a breakout to be clear before entering.
Bollinger Bands remain tightly contracted, so it should be expected they will soon expand as volatility returns and price begins to trend again. Price is no longer finding support right at the mid line of the bands, but price does remain mostly within the upper half of the bands and mostly above the 13 day moving average at this time.
This analysis is published @ 09:26 p.m. EST.