A correction was expected to unfold, which is what has happened, but it was expected to be over more quickly though.
Summary: The trend is up. The target remains at 1,582. Corrections are an opportunity to join the trend. Invest no more than 3-5% of equity on any one trade and always use a stop loss on all trades. In the short term, a correction should end soon at 1,347 – 1,346.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
Last weekly chart 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 minute wave i.
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).
HOURLY ELLIOTT WAVE COUNT
Three first and second waves are complete: intermediate waves (1) and (2), minor waves 1 and 2, and minute waves i and ii. All are shown on the daily chart.
Minuette wave (i) is complete within minute wave iii. Minuette wave (ii) is most likely still incomplete.
Within minuette wave (ii), subminuette wave a fits best as an impulse and looks like a five wave structure. If this is correct and subminuette wave a is a five, then the correction for minuette wave (ii) cannot be over there. Minuette wave (ii) would be subdividing as a zigzag. Within the zigzag, subminuette wave b may not make a new high above the start of subminuette wave a at 1,366.95. A new high short term prior to a low below 1,349.25 would mean the analysis of minuette wave (ii) is wrong, and it would then most likely be over already.
At 1,347 subminuette wave c would reach equality in length with subminuette wave a. This is very close to the 0.382 Fibonacci ratio of minuette wave (i) at 1,346, giving a $1 target zone with a reasonable probability.
If price keeps falling through this target zone, then the next possible point for downwards movement to end would be the 0.618 Fibonacci ratio at 1,333.
Minute wave ii one degree higher lasted 41 hours. So far minuette wave (ii) is longer in duration, but not so much so that the wave count looks wrong. It should be expected to be over quite soon, very likely now within the next few hours. It may come to a swift end.
When minuette wave (ii) is complete, the reversal should be clear: Minuette wave (iii) upwards should begin with clearly upwards movement, not sideways.
Minuette wave (ii) may not move beyond the start of minuette wave (i) at 1,312.50.
The lower cyan trend line may offer support. If this line is touched, expect price to bounce up from there. If that happens, it would offer a very good entry point for long positions.
Last week completes a bullish engulfing weekly candlestick that has stronger volume than the week before. After a short downwards movement, this is a reversal pattern from down to up or down to sideways.
Price broke above resistance last week about 1,345 and closed above this line. Next resistance would be about the last high about 1,380.
On Balance Volume is giving a bullish signal at the end of last week with a break above the purple trend line. The next line to offer resistance for OBV is the new green line.
RSI is not extreme yet. There is room for price to rise further.
Overall, the weekly volume profile is bullish. Volume increases as price rises and volume declines as price falls. There is no indication yet of an end to this upwards trend at the weekly chart level.
With price in a small correction, lighter volume should be expected. Volume for Thursday is light but stronger than the prior downwards day. This offers some support to the Elliott wave count and indicates that the trend is still most likely upwards.
There is still some concern that since the low on 25th of July volume is overall declining as price is moving higher. Sometimes Gold’s waves begin like this, and recent examples can be found since the low on 3rd December 2015, but it is still some cause for concern. The decline in volume makes this upwards movement so far look corrective and does not support the Elliott wave count.
Caution is advised if entering long positions here based upon this wave count. It is absolutely essential that risk is managed; stops must be used so that your account is not fully exposed in the event that the correction continues lower.
On Balance Volume is bullish with a break above the purple trend lines. OBV still exhibits some hidden bearish divergence with price though: as OBV made a new high price did not. This indicates some weakness in price. However, trend lines are a more reliable signal than divergence from OBV. On balance OBV is more bullish than bearish.
ADX is still slightly increasing today, indicating there is still an upwards trend in place. ATR still disagrees though as it is declining. There is some concern that this upwards wave from the low on 25th of July is showing weakness.
RSI is not extreme. There is room for price to rise or fall.
Stochastics is returning from overbought, and price may be returning from resistance. If this upwards wave is part of a larger correction as ATR and volume suggest it may be, then a downwards swing would be expected to continue from here until price finds support about 1,310 and Stochastics is oversold at the same time.
This analysis is published @ 09:14 p.m. EST.