Upwards movement was expected for Tuesday’s session but did not happen.
Price moved lower but remains above the invalidation point.
Summary: Price should turn upwards as an upwards trend develops. Range and volatility are expected to increase. The long term target remains at 1,585. The volume profile remains bullish and supports the Elliott wave count.
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 alternate.
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. It expects the most common scenario is most likely. At 1,585 intermediate wave (3) would reach 1.618 the length of intermediate wave (1).
Intermediate wave (2) may now be complete ending just below the 0.382 Fibonacci ratio of intermediate wave (1) and lasting 40 days. Within intermediate wave (3), minor wave 2 may not move beyond the start of minor wave 1 below 1,302.93.
Draw a channel about intermediate wave (2) using Elliott’s technique for a correction (blue lines). Price is finding some resistance on the way up about the upper edge. After breaking through resistance at the upper blue line price may then turn down to find support about there.
With this wave count expecting a third wave at two large degrees to begin, look out for surprises to the upside at this stage.
Intermediate wave (1) lasted 27 days and intermediate wave (2) lasted 40 days. Intermediate wave (3) may be reasonably expected to last longer than intermediate wave (1) in both time and price. A Fibonacci 55 days would be a first expectation.
HOURLY ELLIOTT WAVE COUNT
With price moving lower, the double zigzag no longer has a good fit and does not look right. A single zigzag may now be either complete or very close to completion.
At the daily chart level, the green doji for 12th of September now gives minor wave 2 a clearer three wave look.
At 1,312 minute wave c would reach 0.618 the length of minute wave a. Price is now very close to the lower edge of the Elliott channel drawn about this zigzag. If it touches the lower edge, that may provide enough support to halt the fall in price. The lower edge of the maroon channel on the daily chart should also provide support before the invalidation point is reached.
Minor wave 2 may not move beyond the start of minor wave 1 below 1,302.93.
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 a deeper zigzag which would exhibit perfect alternation.
Within primary wave 5, no second wave correction may move beyond the start of its first wave below 1,302.93.
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 at 1,477.77.
The hourly chart would be exactly the same.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Last week moved price reasonably higher, but as yet now a new high above 1st August or 5th July has been made. The green candlestick colour is bullish, but the long upper wick is bearish. The decline in volume for an overall upwards week is bearish, but to understand what is exactly happening in terms of volume it needs to be looked inside at daily volume bars.
On Balance Volume remains bullish with an upwards move further away from the yellow support line.
RSI is still not extreme. There is room for price to rise or fall.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Another downwards day comes with lighter volume than the prior day. The fall in price is not supported by volume. Volume of the last five days is still lighter than prior upwards days. The short term volume profile is still bullish.
Price may find some support here about the 55 day moving average. If price moves below the 55 day average, then it should find very strong support at the horizontal trend lines at 1,310 and 1,305.
Gold remains range bound. The sideways consolidation began back on 7th of July. It is now three upwards days of 8th of July, 26th of August, and 6th of September that have strongest volume. The signal is clear. Gold is more likely to break out of this consolidation upwards than downwards. Resistance is about 1,375 and support about 1,305.
The shortest moving average, a Fibonacci 13, is pointing lower but remains above both the mid term and long term moving averages. The Fibonacci 55 day moving average is now flat, but the long term 200 day moving average is still pointing upwards. The larger trend remains up.
On Balance Volume is breaking below the yellow support line. The breach is as yet too slight for this to be a clear bearish signal. If OBV turns upwards from here, then it would be offering a strong bullish signal and the line may need to be slightly adjusted to sit on the low for today. If OBV moves lower tomorrow, that would be a strong bearish signal; it may precede further strong downwards movement from price.
RSI is now just below neutral. There is plenty of room for price to rise or fall. There is no divergence today between price and RSI to indicate weakness.
ADX is declining indicating the market is not currently trending. The +DX line is still above -DX line. A cross over would indicate a potential trend change, but the black ADX line must increase also to indicate a downwards trend.
ATR is also declining for five days in a row now. Range for the last five days is very clearly smaller than prior upwards days. This strongly suggests that this downwards movement is a counter trend pullback and not the start of a new downwards trend.
Stochastics did not manage to reach overbought at the last high.
Bollinger Bands are still tightly contracted. This also supports the idea that the last four days downwards movement is a counter trend movement and not the start of a new trend.
This analysis is published @ 05:40 p.m. EST.