A correction was expected to end about 1,347 – 1,346. A lower target was considered at 1,333.
Price moved well below the preferred higher target.
Summary: The trend is up. The target remains at 1,582. Monday may begin with a very little downwards movement before the upwards trend resumes. There is still enough bearishness from volume to warrant extreme caution with this trend. If choosing to enter long, members are very strongly advised to use a stop loss in case price moves lower and invalidates the wave count. Invest no more than 3% of equity on any long trade here.
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 very close to completion. It may end with a slight overshoot of the cyan trend line at the 0.618 Fibonacci ratio of minuette wave (i) at 1,333.
Minute wave ii one degree higher lasted 41 hours. So far minuette wave (ii) is longer in duration, but still not so much so that the wave count looks wrong. At the daily chart level, the wave count still has the right look.
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. With price now at this trend line, if this analysis is wrong, it may be in expecting the line to be breached. If price begins to move strongly higher when markets open on Monday, then this trend line may have offered strong support and minuette wave (ii) may possibly have been over at the low on Friday.
Last week completed a bullish engulfing candlestick pattern supported by stronger volume than the prior downwards week. This week made a new high, then completed a red candlestick on lighter volume. Overall, the fall in price this week is not supported by volume at the weekly chart level. This week looks to more likely be a corrective movement than a new trend.
On Balance Volume is still relatively bullish above the purple trend line, which is redrawn at the end of this week. A break below the purple line would be bearish. A break above the green line would be bullish.
RSI is not extreme. There is room for price to rise or fall.
First impression of Friday’s candlestick is a strong downwards day that is well supported by volume. With the fall in price over the last three days having support from volume, the initial impression is that this movement may be a new downwards trend and not a counter trend movement. Price has closed below the 13 day moving average, which often (not always) provides support or resistance for smaller corrections during Gold’s trends.
ADX is declining still and has not indicated a trend change. The +DX line remains above the -DX line. ADX is indicating a correction is unfolding.
ATR disagrees as it is increasing for Friday. ATR indicates a new trend may be emerging. The trend would be down. ADX and ATR need to agree before any confidence may be had in a new downwards trend though.
Looking back over this bull market that started on 3rd December, 2015, the multi day corrections may assist to see how Friday’s volume spike should be interpreted.
During the upwards trend from 3rd of December, 2015, 14 multi day corrections are noted. Of those 14 multi day corrections, 8 ended with strong volume on the final day and six did not. Gold has a tendency to blowoff tops and volume spikes at the end of downwards waves. It is possible that this is what happened on Friday.
There are two ways to read Friday’s strong volume: as a spike at the end of a movement, which is a bullish interpretation, or as support for downwards movement, which is a bearish interpretation.
On Balance Volume may be useful in deciding which interpretation is more likely. OBV is bullish in regards to trend lines here on the daily chart but bearish in regards to some divergence with price. Overall, OBV works more reliably with trend lines than it does with divergence, so the weight of evidence is judged here to be bullish but only slightly.
There is enough bearishness still for caution to be warranted. If choosing to enter long positions here, it is absolutely essential that stops are used to protect your account in the event that this correction continues lower. Do not invest more than 3% of equity in any long position entered here.
This analysis is published @ 11:11 p.m. EST.