A very slight new high was expected before downwards movement.
Price has moved lower, but it did not make a slight new high first.
Summary: A lack of support from volume for today’s downwards movement is concerning for the main wave count in the short term. The bear flag pattern may not be complete yet. When it is done, the breakout is still expected to be down. In the first instance, a breach of the pink / blue channel on the Elliott wave charts is required for confidence in a downwards breakout. Thereafter, a new low below 1,247.67 would confirm it.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
The last published monthly chart may be seen here.
DAILY ELLIOTT WAVE COUNT
This wave count sees a correction downwards as close to completion.
Within multiple corrections labelled W-X-Y (X-Z), the rule states the maximum number of corrective structures is three. This maximum applies only to the corrective structures of W, Y and Z. Otherwise the maximum would need to be five, not three.
Within multiples, each corrective structure of W, Y and Z may only themselves be labelled as simple corrective structures: A-B-C, or A-B-C-D-E in the case of triangles. They may not themselves be labelled W-X-Y (X-Z). That would increase the maximum beyond three and violate the rule.
This rule does not apply to the joining structures labelled X. They may be any corrective structure including multiples.
The most common mistake for those new to Elliott wave or sometimes those who do not appear to have understood the rule, is to label long movements as W-X-Y-X-Z, with each of W, Y and Z also labelled as multiples. Such labelling of multiples within multiples violates the Elliott wave rule. Such analysis is of no predictive use and should not be seriously considered.
Here, the second zigzag in the double is relatively close to completion. Minor wave C may most likely be about 0.618 the length of minor wave A, which would see it about $62 in length. Minor wave C is highly likely to make at least a slight new low below the end of minor wave A at 1,242.87 to avoid a truncation. When the end of minor wave B is possible again, then a target for minor wave C downward may be calculated.
The small pink channel about minor wave B is drawn using Elliott’s technique for a correction. When this channel is breached to the downside, it will be indicating the correction of minor wave B as over and the next wave down for minor wave C as underway.
Minor wave B may not move beyond the start of minor wave A above 1,343.38.
HOURLY ELLIOTT WAVE COUNT
Minor wave B was already over at the last high. The final wave up of minuette wave (v) will fit as a five wave impulse on the five minute chart, with a quick shallow fourth wave towards the top. Gold often exhibits quick shallow fourth waves following third waves that end with very strong movements, and at the five minute chart level this looks like what happened on Friday.
If minor wave B is over, then the first wave down must subdivide as a five. The only way to see minuette wave (i) as a five is as a leading contracting diagonal. This wave count is valid, but the possible diagonal does reduce the probability a little. First waves are more commonly impulses than diagonals.
The correction for minuette wave (ii) may be expected to be very deep. Second wave corrections following first wave leading diagonals are commonly very deep, so it may find resistance about the upper edge of the pink channel.
Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,283.63.
The target remains the same. At 1,222 minor wave C would reach 0.618 the length of minor wave A. If this wave count is correct, then this target may be met in about another five days.
ALTERNATE DAILY ELLIOTT WAVE COUNT
The zigzag downwards for primary wave X may be complete, at all time frames. A target for primary wave Y upwards would be about 1,569 where primary wave Y would be about even in length with primary wave W.
So far, within the five up for intermediate wave (A), minor waves 1 and 2 may be complete. Within minor wave 3, minute waves i and now ii may also be complete.
Gold’s impulses often begin rather slowly. This wave count is still possible and volume for Friday’s session offers it some support.
Minute wave ii may not move beyond the start of minute wave i below 1,247.67.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
Minute wave ii may be unfolding as a double zigzag. The first zigzag in the double labelled minuette wave (w) did not reach the 0.382 Fibonacci ratio of minute wave i, so a second zigzag may be required to deepen the correction.
Minute wave ii may end close to the 0.618 Fibonacci ratio of minute wave i about 1,261. It may find support at the lower edge of the blue channel.
The blue channel on this alternate is drawn in the same way as the pink channel on the main wave count. The lower edge of this channel will be important for both wave counts. How price behaves when it gets down there will indicate which wave count is correct. If the channel provides strong support, then this alternate wave count would be preferred.
This alternate wave count can see downwards movement for Monday’s session as a zigzag. This has a better fit than seeing it as a leading diagonal (for the main wave count). It will fit both ways and it is impossible to determine with certainty which structure it is, so both possibilities should be considered.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Last week closes with an increase in volume. Last week’s upwards movement was supported by volume.
On Balance Volume has come up to touch the purple resistance line. This may stop price from rising any or much further next week.
The divergence between price and RSI at the last two major swing lows, indicated by gold lines, is still important. It indicates a reasonable low in place and supports the alternate wave count over the main wave count.
Click chart to enlarge. Chart courtesy of StockCharts.com.
The strong upwards movement for Friday has strong support from volume. However, the long upper and lower wicks on Friday’s candlestick indicate some caution. Price has not been able to close above the upper edge of the flag pattern, so this is not an upwards breakout despite strong upwards movement for Friday.
Now Monday’s session has closed with overall downwards movement on lighter and declining volume. The fall in price was not supported by volume.
During the flag pattern, it is an upwards day which has strongest volume. This suggests an upwards breakout is more likely than a downwards breakout.
On Balance Volume has turned downwards from the purple line. The strength of this line is reinforced. OBV may find some support at the yellow line.
RSI may today be indicating a trend change as the -DX line comes to sit on the +DX line. If they cross over, a change would be indicated. The ADX line would still need to show an increase to show a new trend.
ATR continues to decline. Bollinger Bands continue to contract. This market is tightly consolidating; a trend is not indicated.
With the mid term Fibonacci 55 day moving average still indicating a downwards trend, it should be assumed that the trend remains downwards. This is still supported by what looks like a flag pattern unfolding.
This analysis is published @ 09:56 p.m. EST.