Again, upwards movement was expected for Friday’s session.
Price still remains above the invalidation point.
Summary: Upwards movement is still expected as most likely and should show an increase in momentum and strong volume over the coming weeks. A new high now about 1,327.77 would add confidence. A short term target is first at 1,370 and second at 1,405. 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.
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 not provided strong support for Friday as it was expected to do. If Monday’s candlestick completes and remains below and not touching the maroon trend line, then the channel would be breached and this wave count would substantially reduce in probability, so it would become an alternate. This shift in probability would remain even if price remained above the invalidation point. For now, the channel is overshot but not properly breached.
A new support line in cyan is drawn.
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.
This wave count is reverted to seeing minute wave i over later with a slightly truncated fifth wave, by 1.66. This is possible, but it does reduce the probability.
If minute wave i ends here, then minute wave ii fits as a zigzag. Minuette wave (c) is 1.35 short of 0.618 the length of minuette wave (a).
At 1,370 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 1,405 minute wave iii would reach 2.618 the length of minute wave i.
A new high above 1,327.77 would invalidate the alternate below and provide confirmation for this main wave count.
ALTERNATE DAILY ELLIOTT WAVE COUNT
This alternate is a variation on the alternate published in last analysis.
The degree of labelling within Primary wave 3 is moved up one degree. Primary wave 3 is seen as complete.
Thereafter, primary wave 4 is seen as incomplete. Primary wave 4 may not move into primary wave 1 price territory below 1,282.68.
Primary wave 3 is shorter than primary wave 1 for this alternate wave count. This is possible but not common. This reduces the probability of this wave count.
Primary wave 2 was a shallow 0.35 expanded flat. Primary wave 4 exhibits alternation in structure as a zigzag but not in depth. It cannot be deep because that would invalidate the wave count.
Within the zigzag, intermediate wave (A) fits as a five wave structure. Intermediate wave (B) fits as a running contracting triangle. At its end, as it completed, this triangle is supported by MACD hovering about the zero line.
Intermediate wave (C) would be very likely to end at least slightly below the end of intermediate wave (A) at 1,310.84 to avoid a truncation. This wave count could end in one to a few more days of downwards movement.
The maroon channel is drawn using Elliott’s first technique. Primary wave 4 may find support about the lower edge.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
Intermediate wave (C) so far fits neatly as a five wave impulse, which would be very close to completion.
Within the impulse, minor wave 3 is just 0.18 longer than 2.618 the length of minor wave 1. Minor wave 5 may not exhibit a Fibonacci ratio to minor wave 1.
At 1,302 intermediate wave (C) would reach 0.618 the length of intermediate wave (A). This target would see intermediate wave (C) end beyond the end of intermediate wave (A) avoiding a truncation.
Within minor wave 5, no second wave correction may move beyond the start of its first wave above 1,327.77.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Gold is still range bound and has been for about 14 weeks. Resistance is about 1,375 and support is about 1,310 – 1,305. Volume is declining as price moves sideways. To look at what direction the breakout is most likely to be volume at the daily chart level should be used.
This week sees a small increase in volume for a downwards week, stronger than last week’s upwards week. The fall in price has some support from volume. This is concerning for the main Elliot wave count because it suggests downwards movement is not quite over.
On Balance Volume this week gives a bearish signal with a move down and away from the short purple trend line. OBV may be expected to find support at the yellow line.
There is still bullish divergence between price and RSI for the lows two and four weeks ago (short yellow lines). Price has not made a new low yet, so this bullish divergence may still be an indicator of a low in place. This is usually a fairly reliable signal for Gold at the weekly chart level. This favours the main Elliott wave count.
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.
Price has been moving lower all week. With volume for Friday the strongest in the last seven days, it now looks like there is support for the fall in price from volume. This favours the alternate Elliott wave count.
A triangle pattern looks like it is forming. Price may find support here about the lower edge, which allows for only a very slight new low before price comes to touch the trend line. This supports the main Elliott wave count.
On Balance Volume found resistance at the purple line and should find support at the yellow line. This allows for a reasonable amount of downwards movement before OBV finds support.
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 is not 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 has again come down to touch the mid term average. Within a consolidation, shorter term averages may fluctuate about each other.
This analysis is published @ 08:03 p.m. EST on 1st October, 2016.