Mostly sideways movement was expected for Monday.
A green daily doji candlestick fits expectations perfectly.
Summary: The short term target is at 1,344. The next daily candlestick is expected to be green, and this is supported by a bullish signal today from On Balance Volume. Thereafter, another multi day pullback may begin. The long term target remains the same 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 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.
When minute wave i upwards is complete, then another multi day pullback for minute wave ii should begin. Minute wave ii may not move beyond the start of minute wave i below 1,306.70. Minute wave i may end close to the upper blue trend line. Minute wave ii may end when price touches the lower maroon trend line.
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. Intermediate wave (3) may end with a blowoff top.
The lower edge of the maroon base channel has proven to be providing strong support. Copy this over from weekly charts: draw a base channel from the start of a first wave to end end of the second wave, then place a parallel copy on the end of the first wave. In this case, the lower edge of the base channel is providing support. If price again comes down to touch it for another pullback, then it would provide an opportunity to join the trend at a very good price.
HOURLY ELLIOTT WAVE COUNT
At 1,437 minor wave 3 would reach 2.618 the length of minor wave 1.
Minor wave 3 may only subdivide as an impulse. Within Minor wave 3, minute wave i is close to completion.
Within minute wave i, the correction for minuette wave (ii) was a relatively deep 0.65 double combination. Minuette wave (iv) may now be a complete shallow 0.32 zigzag exhibiting perfect alternation.
There is no Fibonacci ratio between minuette waves (i) and (iii). This makes it more likely that minuette wave (v) will exhibit a Fibonacci ratio to either of minuette waves (i) or (iii). The most common ratio for a fifth wave is equality in length with the first wave. This gives a target for minuette wave (v) at 1,344.
The target would see minute wave i end just short of the blue channel on the daily chart. It may end in one more session. Short term swing traders may take profits in one more session. Position traders may prefer to hold on.
When minute wave i is a completed five wave impulse, then a multi day pullback for minute wave ii may begin. Minute wave ii should end if price again comes down to touch the lower maroon channel on the daily chart. If that happens, it would provide an excellent opportunity to join the trend at a good price.
As always, invest no more than 3-5% of equity on any one trade and always use a stop loss for all trades.
It is somewhat concerning that price has broken below the lower edge of the Elliott channel. Channels do not always work perfectly, so this breach does not invalidate the wave count. If the invalidation point at 1,332.74 is breached prior to a new high, then it would be possible that minute wave i is over earlier than expected and minute wave ii may have begun a day earlier than expected.
Within minuette wave (v), the correction for subminuette wave ii may not move beyond the start of subminuette wave i below 1,332.74.
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, minor wave 2 may move beyond the start of minor wave 1 below 1,306.70.
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 completes a bullish engulfing candlestick pattern, but it is not supported by volume. To see more clearly what is happening for volume last week we’ll look at daily volume.
Price may find some resistance about 1,345.
On Balance Volume is still bullish at the weekly chart level.
At the weekly chart level, RSI is still not extreme. There is room for price to rise or fall. There is no divergence between price and RSI to indicate weakness.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Gold remains range bound with resistance about 1,375 and support about 1,310 – 1,305. During this consolidation, it is four upwards days that have strongest volume suggesting an upwards breakout is more likely than downwards.
The last three days of green candlesticks come with higher and overall declining volume. The rise in price is not supported by volume. Another pullback may be the result short term and this fits reasonably well with expectations for the Elliott wave count.
On Balance Volume gave a bullish signal with a break above the purple line. Now it gives another bullish signal with a test of support at the line as it now moves up and away from the line.
RSI is close to neutral. There is room for price to rise, or fall. There is no divergence today between price and RSI to indicate weakness.
ADX is rising but is still not above 15. It is not yet indicating a new upwards trend. The market is still consolidating.
Stochastics is nearing overbought but is not quite there yet. One or two more days of overall upwards movement may bring it closer, then this upwards swing may be ready to end. Price may find resistance at another point within the consolidation, about 1,355 where the last small upwards swing ended.
Bollinger Bands remain tightly contracted. This market may not yet be trending.
The longer term trend remains up. The 200 day moving average is still pointing up and price is above it. The mid term Fibonacci 55 day moving average is still pointing up and is above the longer term average. The short term Fibonacci 13 day moving average is now moving up from the mid term average, and the short term trend is also up (within the larger consolidation).
This analysis is published @ 08:42 p.m. EST.