Upwards movement was expected for Thursday’s session.
Price moved a little lower.
Summary: Upwards movement is now expected and should show an increase in momentum and strong volume over the coming weeks. Corrections may now start to be more brief and shallow. A short term target is first at 1,376, and second at 1,412. A mid term target is at 1,437. 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. 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.
A multi day pullback for minute wave ii is most likely now complete; it should find very strong support here at the lower edge of the maroon channel. It has now lasted a Fibonacci five days. Minute wave ii may not move beyond the start of minute wave i below 1,306.70.
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 four 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. Risk to long positions is at 1,306.70. Always use a stop loss for all trades, and do not invest more than 3-5% of equity on any one trade.
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 waves i and now ii both look complete.
The orange channel is now redrawn using Elliott’s second technique, but the upper edge is not working to show a trend change. Price has broken above it yet returned below. In this instance, price points may be a better method to judge confidence in a trend change.
A new high above the start of subminuette wave v at 1,325.30 could not be a second wave correction within subminuette wave v, at that stage subminuette wave v would have to be over. A new short term swing high would add confidence in a trend change.
The invalidation point and risk must remain at 1,306.70 while price remains below 1,325.30. It is still possible that minute wave ii may continue a little lower, but it may not move beyond the start of minute wave i below 1,306.70.
At 1,376 minute wave iii would reach 1.618 the length of minute wave i. If price keeps rising through this first target, or if when it gets there the structure is incomplete, then the second target would be used. At 1,412 minute wave iii would reach 2.618 the length of minute wave i.
Minute wave i lasted four days. Minute wave ii has now lasted a Fibonacci five days. It has slightly overshot the maroon channel on the daily chart. If this wave count is right, then downwards movement should end here.
Downwards movement is showing strong and persistent divergence with MACD; momentum is weakening, exactly as should be expected for the end of an impulse.
If price moves lower tomorrow and the maroon channel is breached, this wave count would be in serious doubt.
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.
Volume for Thursday’s session is slightly lighter than Wednesday. With Thursday producing a lower low and a lower high, the session did move price lower and the decline in volume may be read as exhaustion for bears. However, the session closed green; the bulls rallied at the end but not enough to produce a new high. The doji candlestick with a long lower wick is slightly bullish but would need confirmation with a green daily candlestick for the following session.
The purple trend line on On Balance Volume was not working well. OBV had today come up to almost cross back above it. The line is redrawn. This new line allows for a little upwards movement before OBV may find resistance.
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 today declining. It is not yet indicating a new upwards trend. The market is still consolidating.
ATR is still overall flat to declining, in agreement with ADX.
Bollinger Bands remain tightly contracted. This market may not yet be trending.
Both price and Stochastics are coiling within this consolidation. A recent series of lower highs and higher lows for both on declining volatility may be a triangle pattern. Resistance lines on price and Stochastics are drawn in purple, support lines on both in yellow. A break above resistance by price and / or Stochastics may signal a return of an upwards trend. A break below support may signal a new downwards trend. The lines on Stochastcis will be watched closely to see if they are breached first to possibly indicate the breakout direction for price.
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 @ 08:13 p.m. EST.