Both hourly Elliott wave counts expected a new low before some upwards movement. Both hourly counts remain valid.
Summary: Look out now for surprises to the upside. With price at support, a green daily candlestick, and divergence between price and Stochastics expect more upwards movement here. The target for the Elliott wave count for a third wave to end is now at 1,585.
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 this stage, the target for primary wave 3 is removed. A new target for intermediate wave (3) is calculated: 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. However, price remains within the small pink channel and has not yet offered confirmation of a trend change. It must be accepted that intermediate wave (2) may yet move lower. 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.
At this stage, a new high above 1,330.01 could not be a continuation of minute wave iv, so at that stage minute wave iv and minor wave C would have to be over. A new high above 1,330.01 would provide strong confidence in a trend change and the resumption of the prior upwards trend.
Keep the small narrow pink channel on daily and hourly charts. Draw a channel about intermediate wave (2) using Elliott’s technique for a correction (blue lines). Price is finding support at the lower edge. The lower edge of this channel may stop price from falling further.
With this wave count expecting a third wave at two large degrees to begin, look out for surprises to the upside at this stage.
HOURLY ELLIOTT WAVE COUNT
Minor wave C must subdivide as a five wave structure.
The structure may now be complete. This is the main wave count today because of the green daily candlestick. At the daily chart level, it looks like minor wave C is over. Price is finding support about the lower edge of both the pink and blue channels copied over from the daily chart.
There would be no Fibonacci ratio within intermediate wave (2) between minor waves A and C.
Ratios within minor wave C are: there is no Fibonacci ratio between minute waves i and iii, and minute wave v is 1.15 short of 0.382 the length of minute wave i.
Ratios within minute wave iii are: minuette wave (iii) is just 0.07 short of 2.618 the length of minuette wave (i), and minuette wave (v) is 1.42 short of equality in length with minuette wave (i).
Ratios within minute wave v are: minuette wave (iii) is just 0.08 short of 2.618 the length of minuette wave (i), and minuette wave (v) has no adequate Fibonacci ratio to either of minuette waves (i) or (iii).
A new high above 1,315.89 would invalidate the triangle on the alternate hourly chart below. That would add a little confidence to this main wave count.
A new high above 1,330.01 would invalidate the alternate hourly wave count below and provide further reasonable confidence in this main wave count.
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.
No second wave correction may move beyond the start of its first wave below 1,302.93.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
Both hourly wave counts today see minute wave iii over at the low for 30th of August.
It is possible that a final new low is yet to be made, that minute wave iv is incomplete. When minute wave iv is a complete structure, then a final wave down for minute wave v may be needed to complete the whole structure of minor wave C.
At this stage, minute wave iv may be unfolding sideways as a running contracting triangle. Within a contracting triangle, minuette wave (c) may not move beyond the end of minuette wave (a) above 1,315.89.
When minuette wave (c) is complete, then minuette wave (d) down may not move reasonably below the end of minuette wave (b) at 1,302.93. A contracting triangle must see minuette wave (d) end above the end of minuette wave (b). A barrier triangle must see minuette wave (d) end about the same level as minuette wave (b); as long as the (b)-(d) trend line remains essentially flat the triangle would remain valid. In practice, this means minuette wave (d) may end slightly below the end of minuette wave (b). This is the only Elliott wave rule which is not black and white.
Thereafter, a final small wave up for minuette wave (e) would most likely end short of the (a)-(c) trend line and may not move beyond the end of minuette wave (c).
If the triangle is invalidated with a new high above 1,315.89, then it would be possible that minute wave iv could be unfolding as an expanded flat or a combination.
Minute wave iv may not move into minute wave i price territory above 1,330.01. This wave count would be invalidated above 1,330.01 leaving only the main wave count.
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 at 1,477.77 if it has begun at today’s low.
The hourly charts would be exactly the same except for the degree of labelling.
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.
Volume for today’s upwards day comes with slightly lighter volume than yesterday’s downwards day, but overall volume has not substantially reduced. The volume profile is short term slightly more bearish than bullish.
Price found support very close to the lower edge of the support zone today, which is 1,305 – 1,310. With this area being the lower edge of the larger consolidation, which began back on 7th of July, it would be reasonable to expect downwards movement to end here or very soon indeed.
Stochastics exhibits multi day bullish divergence with price: Stochastics has made a higher low above the prior low for 26th of August as price made a slight new low today. With Stochastics oversold and now exhibiting divergence, it would be reasonable to expect downwards movement to end here or very soon indeed.
On Balance Volume is giving a weak bullish signal today with a move up and away from the yellow line. This line is offering support, but it has recently been weakened with a breach and return. For this reason the signal is only weak. OBV may find some resistance now at the purple line.
RSI is not extreme. There is still room for price to fall further. There is no divergence between price and RSI to indicate weakness.
ADX and ATR are both declining, indicating that the market is not trending; it is consolidating. Bollinger Bands remain contracted and slightly narrowed today. All three of these indicators are in agreement that this market is consolidating.
After a period of declining ATR, it should be expected that range will again begin to increase at some stage.
After a period of declining and low volatility, it should be expected that volatility will again return to the market and Bollinger Bands will again widen at some stage.
The shorter 13 day moving average is declining but remains above the mid term 55 day moving average. The 55 day average is also still declining. The long term 200 day moving average is still increasing and price remains above it. The longer term upwards trend should be assumed to remain intact. With the shorter term average still above the mid term average, it should be assumed that this downwards swing is a correction and not necessarily the start of a new downwards trend.
This analysis is published @ 06:37 p.m. EST.
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