Downwards movement unfolded exactly as expected.
Summary: The main and alternate wave counts today are judged to have a close to even probability. Classic technical analysis today favours the alternate and more downwards movement. A new low below 1,310.84 would indicate the alternate is correct, so expect price to continue lower to a target at 1,279. A new high above 1,341.45 would indicate the main wave count is correct, so expect upwards movement to continue with strengthening momentum and volume to a target at 1,582.
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.
Minute wave ii is incomplete. It may be subdividing either as a double combination or double zigzag. Within the second structure in the double, labelled minuette wave (y), the structure is incomplete.
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 this stage, I have chosen to close long positions, taking a little profit. I will wait for minute wave ii to be over before entering again.
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).
A new high above 1,356.85 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 eleven.
At this stage, the duration of minute wave ii is now giving this wave count an odd look in terms of proportion. Minute wave ii has lasted 17 days, minor wave 2 lasted 11 days, and intermediate wave (2) lasted 6 days. Each lower degree second wave is taking longer in time where normally they should be more brief. For this reason, at this stage, the alternate has a better look at the daily chart level today.
HOURLY ELLIOTT WAVE COUNT
Minute wave ii fits as either a double combination or a double zigzag. The first structure in the double (seen on the daily chart) fits as a zigzag labelled minuette wave (w). The double is joined by a three in the opposite direction labelled minuette wave (x), which fits perfectly as a zigzag.
The second structure in this double may now be complete. It will subdivide as a zigzag and looks best as a zigzag. Minuette wave (y) has moved comfortably beyond the end of minuette wave (w) deepening the correction and achieving the purpose of a second zigzag in a double.
It is possible that labelling within subminuette wave c is wrong because it may still be yet to complete with another low. A breach of the invalidation point by any amount at any time frame would fully invalidate this wave count and confirm the alternate.
A new high above 1,341.45 is required for confidence in this wave count. At that stage, a third wave up at four degrees should be expected to be in the very early stages.
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.
Notice also how this third wave began with a series of overlapping first and second waves. When third waves extend, which is very common, this is very often how they begin. When that happens, they convince us the market will not move strongly and the wave count must be wrong, and they do that right before the trend moves clearly with increasing momentum and volume.
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 36 days and would still be incomplete.
Within minute wave iii, no second wave correction may move beyond the start of its first wave above 1,356.85.
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.
Primary wave 2 lasted 56 days (one more than a Fibonacci 55). So far intermediate wave (2) is more brief in duration. It has lasted 36 days and may be just a few days away from completion. At this stage, this wave count has better proportions than the main wave count.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
Within minuette wave (iii), the structure looks to be incomplete. This part of downwards movement is essentially seen in the same way for both wave counts, only the degree of labelling differs. Both see an impulse unfolding lower.
Minor wave C must subdivide as a five wave structure. This alternate wave count would be confirmed with a new low below 1,310.84.
Minor wave C still needs more downwards movement. Along the way down two more fourth wave corrections should complete and be followed by fifth waves downwards towards the target.
Minuette wave (iv) is most likely to be a zigzag to exhibit alternation with the expanded flat of minuette wave (ii). It is most likely to be shallow also, to exhibit alternation, and so the 0.236 and 0.382 Fibonacci ratios are reasonable targets. Minuette wave (iv) may not move into minuette wave (i) price territory above 1,341.45.
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.
Two green weekly candlesticks in a row come now with a small rise in volume. Volume for both weeks is stronger than the prior downwards week. Short term, at the weekly chart level, the volume profile looks bullish.
Last week completes a weekly candlestick with a higher high and a higher low than the week before. Overall, price has moved upwards last week.
It is concerning for the main wave count that both of these last two weeks have long upper wicks on the candlesticks. These wicks are bearish and indicate caution. For this reason please manage risk carefully. The alternate wave count is possible and illustrates the risk currently to long positions.
On Balance Volume last week has moved up from the lower purple trend line. This is a reasonable bullish signal week.
RSI is still not extreme. There is room for price to rise.
This analysis today is very bearish. On Balance Volume has broken below the yellow support line indicating a downwards breakout from price is likely to follow. Two days in a row of downwards movement with strong and increasing volume is bearish, so the fall in price has support from volume. This looks likely to continue until price finds some support.
The next support line for price is about 1,305 – 1,310.
RSI is not yet extreme. There is room for price to rise or fall. There is no divergence between price and RSI today to indicate weakness in price.
ADX has indicated a trend change as the -DX line crossed above the +DX line. If the black ADX line turns up now, it would indicate a downwards trend.
However, ATR continues to decline. This small downwards move may be a counter trend movement. This supports the alternate wave count.
Stochastics is now just entering oversold. It may move further into extreme territory before downwards movement ends, but it is warning the end may be close.
Bollinger Bands have today widened slightly. A trend may be ready to return. Price is at the lower Bollinger Band, but price can remain at the edge of Bollinger Bands for a few days when it trends.
This analysis is published @ 07:49 p.m. EST.