The main Elliott wave count has been confirmed with a new low below 1,310.84.
Summary: Some more downwards movement this week looks most likely, to about 1,279. If this target is wrong, it may be a little too low. A new high now above 1,330.01 would confirm downwards movement as over and a third wave up as just beginning.
New updates to this analysis are in bold.
Last weekly charts are here.
Grand SuperCycle analysis is here.
DAILY ELLIOTT WAVE COUNT
Primary waves 1 and 2 are complete. Thereafter, this wave count differs from the two alternates.
This main wave count will expect primary wave 3 to be longer than primary wave 1. Because this is very common, this is the main wave count and it expects the most common scenario is most likely. At 1,582 primary wave 3 would reach 1.618 the length of primary wave 1.
Only intermediate wave (1) so far is complete within primary wave 3. Intermediate wave (2) may be close to completion. It may find support at the lower edge of the 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 3 may only subdivide as an impulse.
Minute wave iv may not move into minute wave i price territory above 1,330.01.
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. Because this target at 1,279 would expect an overshoot of the lower edge of the base channel, the target may be too low. Support at the base channel may not allow price to move this low.
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 39 days and may be just a few days away from completion.
Draw a small channel about minor wave C, using Elliott’s technique, and copy it over to the hourly chart.
At this stage, it is just possible to see a complete structure for minor wave C downwards. A new high above 1,330.01 at any stage short term could not be a continuation of minor wave C, so at that stage minor wave C would have to be over. A new high above 1,330.01 would tell us now that intermediate wave (2) should be over and intermediate wave (3) upwards should be underway.
HOURLY ELLIOTT WAVE COUNT
Minor wave C must subdivide as a five wave structure.
Minor wave C is unfolding as an impulse. The question today is whether or not minute wave iv within it is complete.
Minute wave ii was a deep 0.73 zigzag lasting six days. Given the guideline of alternation, minute wave iv would most likely be a very shallow sideways flat, combination or triangle. To have good proportion with minute wave ii, it is likely that minute wave iv will last at least three or four days, if not longer.
Within flats, combinations and triangles, the first wave subdivides as a three. This would now be a complete zigzag for minuette wave (a) or (w).
Within expanded flats and running triangles, minuette wave (b) may make a new price extreme beyond the start of minuette wave (a). The new low today may be part of minute wave iv. There is no maximum limit for X waves within combinations; they too may make new price extremes beyond the start of W waves.
If minute wave iv is a flat correction, then it would be an expanded flat. These are very common structures. The normal range for minuette wave (b) would be 1 to 1.38 the length of minuette wave (a), at 1,315.42 to 1,311.82. Minuette wave (b) is now longer than the common length. There is no rule stating a maximum limit for B waves within flat corrections, but there is an Elliott wave convention which states that when the potential B wave is longer than twice the length of the potential A wave the idea of a flat correction should be discarded based upon extremely low probability. That price point here would be below 1,305.95.
So far minuette wave (b) should be complete and is 1.78 the length of minuette wave (a).
If minute wave iv is unfolding as an expanded flat, then a target for minuette wave (c) would be just below the invalidation point at 1,330. Minuette wave (c) would be close to 2.618 the length of minuette wave (a). Minuette wave (c) would be extremely likely to make at least a slight new high above the end of minuette wave (a) at 1,324.89 to avoid a truncation and a very rare running flat.
If minute wave iv is unfolding as a triangle, then minuette wave (c) may not move beyond the end of minuette wave (a) above 1,324.89. A triangle would be invalid above this point. Thereafter, price should move sideways in an ever decreasing range for another few days for a triangle to be complete. MACD should hover about zero. At this stage, a triangle does not look likely because MACD has moved too far below zero.
If minute wave iv is unfolding as a combination, then within it the first structure labelled minuette wave (w) would be a complete zigzag. The zigzag would be joined by a three in the opposite direction, a zigzag labelled minuette wave (x), which should now be over. The second structure in the double would very likely be a flat correction but may also be a triangle. It should end about the same level as minuette wave (w) at 1,324.85, so that the whole structure moves sideways. Minuette wave (y) should last about two or three days.
Minute wave iv may not move into minute wave i price territory above 1,330.01.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
It is possible that minute wave iv is over as a brief and very shallow zigzag. Minute wave iv would exhibit little alternation with minute wave ii: they would both be zigzags. There would be some alternation in depth: minute wave ii was deep and minute wave iv was shallow. There would be a little alternation within the structure: minute wave ii had a long complicated B wave and minute wave iv had a brief B wave.
Minute wave ii lasted six days. If minute wave iv is over already, it would have lasted only one day. The proportions at the daily chart level do not look very good, but sometimes Gold does exhibit fourth waves which are more brief and shallow than its second waves. This tendency normally shows up in a third wave though and not so often in a C wave.
If minute wave iv is over, then at 1,288 minute wave v would reach equality in length with minute wave i. This would see the base channel on the daily chart only very slightly overshot.
Within minute wave v, no second wave correction may move beyond the start of its first wave above 1,324.89.
Due to the lack of alternation and the poor proportions between minute waves iv and ii, this wave count is possible but has a low probability. It should only be used if price makes a new low short term below 1,305.95.
ALTERNATE DAILY ELLIOTT WAVE COUNT
It is possible that primary wave 3 is over and shorter than primary wave 1. Primary wave 3 shows stronger volume than primary wave 1 (see technical analysis weekly chart).
If primary wave 3 is over, then the current consolidation for Gold would be primary wave 4.
Primary wave 2 was a relatively shallow 0.35 expanded flat correction. Primary wave 4 may be unfolding as a deeper zigzag which would exhibit perfect alternation.
Primary wave 4 may not move into primary wave 1 price territory below 1,282.68.
Primary wave 5 would be limited to no longer than equality in length with primary wave 3, so that the core Elliott wave rule stating a third wave may not be the shortest is met. Primary wave 5 would have a limit of 174.84.
This wave count expects more downwards movement to complete a five wave impulse for intermediate wave (C) in the same way as the main wave count expects a five wave impulse down to complete minor wave C. Only the degree of labelling differs; this wave count is one degree higher.
The hourly chart would be exactly the same except for the degree of labelling.
It is also possible that primary wave 4 may be a regular contracting triangle. If sideways movement continues in an ever decreasing range, then that idea would be published. At this stage, a zigzag looks more likely because the subdivisions have a slightly better fit.
A strong downwards week with an increase in volume supports the main and alternate III wave counts. Overall, volume is still declining and price remains range bound.
The prior two green weekly candlesticks had long upper shadows which was bearish.
Price may find some support about 1,310.
On Balance Volume at the end of last week has come down to find support at the purple trend line. This may help to stop price falling much further.
RSI is not extreme. There is some hidden bullish divergence with price and RSI: RSI has made a lower low below the low of 25th of July but price has made a higher low. This indicates some weakness to this downwards movement. It is more likely to be a smaller correction than a sustainable trend.
Overall, price remains range bound with resistance about 1,375 and support about 1,310 – 1,305. This range bound period began back on 7th of July. During this range bound period, it is the two upwards days of 8th of July and 26th of August which have strongest volume suggesting an upwards breakout is more likely than downwards. This supports all three Elliott wave counts.
Yesterday saw an upwards day with lighter volume; the rise in price was not supported by volume. Now a strong downwards day comes with a slight further decline in volume. A decline in volume is typical of a consolidating market, and volume should be expected to decline further towards the end of the consolidation. In the short term, this decline in volume suggests some upwards reaction about here, so this supports the main hourly Elliott wave count over the alternate hourly count.
The 55 day moving average has not provided support.
On Balance Volume has moved down and away from the purple line which is now strengthened and is providing resistance. OBV may find some support at the yellow line, but this line has been weakened recently with a breach.
Price should find support in the area of 1,310 to 1,305.
RSI is not extreme. There is room for price to rise or fall. There is no divergence today between price and RSI to indicate weakness.
ADX continues to decline and the +DX and -DX lines are whipsawing about each other. ADX indicates this market is not trending. ATR agrees as it too continues overall to decline.
Stochastics is oversold. Price has not yet reached support at 1,310 though, so a little more downwards movement from price may be expected before this downwards swing is over. There is some small day to day divergence between Stochastics and price: price today made a slight new low but Stochastics did not. This indicates weakness in price. Price may not be able to get down to touch support. This divergence suggests that downwards movement may be over for this swing.
Bollinger Bands are widening now for four days in a row. A trend may be beginning to return. If it is, then it would be down. However, this contradicts ADX and ATR.
This analysis is published @ 07:30 p.m. EST.
[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]