A little downwards movement was expected to end about 1,338.
Price has moved lower to reach 1,335.89 so far.
Summary: Look out now for surprises to the upside. In the short term, a little more downwards movement to 1,333 – 1,330 is expected before price turns up to make new highs. The long term target for the Elliott wave count for a third wave to end is at 1,585. in the short term, the volume profile is bullish and classic technical analysis expects upwards movement.
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. 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), the upcoming correction for 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
Minor wave 1 is unfolding as a more common impulse.
Within minor wave 1, so far minute waves i, ii and iii are complete. Minute wave iv is close to completion. There is no Fibonacci ratio between minute waves i and iii, so it is more likely that minute wave v will exhibit a Fibonacci ratio to either of minute waves i or iii. The most common ratio for a fifth wave is equality in length with the first wave, so minute wave v would most likely be 24.37 in length.
Minute wave ii was a quick shallow 0.43 zigzag. The structure within minute wave iv no longer looks right today as an expanded flat; the end of minute wave iii may have been the last high and minute wave iv may have begun there. If this is correct, then minute wave iv may not be exhibiting alternation in structure; it fits neatly as a zigzag. If minute wave iv ends close to the 0.618 Fibonacci ratio, then it would exhibit alternation in depth and duration.
Minute wave ii was very quick. Minute wave iv so far is much more time consuming. This disproportion does not have the right look anymore at the hourly chart level, but it still looks right at the daily chart level. Both minute waves ii and iv show as red candlesticks or doji on the daily chart.
Within the zigzag of minute wave iv, at 1,333 minuette wave (c) would reach 1.618 the length of minuette wave (a). This is reasonably close to the 0.618 Fibonacci ratio of minute wave iii at 1,330 giving a $3 target zone.
Minute wave iv may not move into minute wave i price territory below 1,327.30.
When minute wave iv is complete, then minute wave v should move at least slightly above the end of minute wave iii at 1,351 to avoid a truncation.
When a five wave impulse upwards is complete for minor wave 1, then a multi day correction for minor wave 2 should unfold. It may be relatively deep. Minor wave 2 should offer a good opportunity to join the trend at a good price.
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 made an important new low, slightly below the prior swing low of 18th of July. Price thereafter bounced up strongly from support about 1,310 – 1,305. Last weekly candlestick comes with lighter volume than the week prior.
To see what is happening here we need to look inside last week at daily volume.
The long lower wick of last weekly candlestick is bullish.
On Balance Volume is giving a bullish signal last week as it found support at the yellow trend line and has moved up and away from that line. OBV may find some resistance at the purple line.
RSI is not extreme. There is still room for price to fall or rise. There is no divergence between price and RSI at the weekly chart level to indicate weakness.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Two downwards days in a row come with lighter volume than prior upwards days. Some increase in volume for the second downwards day indicates a little more downwards movement may still unfold. Overall, the volume profile is still bullish.
On Balance Volume gave a bullish signal with a break above the purple line. Now OBV has come down to touch this line that should provide support and halt the fall in price.
RSI is close to neutral. There is room for price to rise or fall. There is no divergence between price and RSI to indicate weakness.
ADX is above 15 and increasing. The +DX line is above the -DX line. A new upwards trend is indicated.
ATR is declining for the last two days. With a small counter trend pull back this makes sense. ATR turned upwards four days ago indicating a new trend may be beginning.
Stochastics is not yet extreme, but this may remain extreme for reasonable periods of time during a trending market.
Bollinger Bands are showing a slight increase. After a period of contraction, it should be expected they will again expand as volatility returns to the market.
Price may find support here about the 13 day moving average.
This analysis is published @ 09:05 p.m. EST.