A very quiet sideways session while New York is closed for Thanksgiving Day includes a slight new low. This makes a difference to the short term picture for the main Elliott wave count.
Summary: A small fourth wave triangle is ending. It should be followed by a short sharp thrust downwards to about 1,170. Thereafter, expect a reversal.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
Last monthly and weekly charts are here.
DAILY ELLIOTT WAVE COUNT
The larger structure of primary wave X may be either a double zigzag or a double combination. The second structure in this double for primary wave Y may be either a zigzag (for a double zigzag) or a flat or a triangle (for a double combination).
It is my judgement at this stage that it is more likely primary wave X will be a double zigzag due to the relatively shallow correction of intermediate wave (X). Although intermediate wave (X) is deep at 0.71 the length of intermediate wave (W), this is comfortably less than the 0.9 minimum requirement for a flat correction. Within combinations the X wave is most often very deep and looks like a B wave within a flat.
However, there is no minimum nor maximum requirement for X waves within combinations, so both a double zigzag and double combination must be understood to be possible. A double zigzag is more likely and that is how this analysis shall proceed.
Within the second structure, minor wave A should be a five wave structure. This now looks complete.
Minor wave B found resistance at the lower edge of the wide parallel channel about primary wave X. Minor wave C may now be almost complete at the hourly chart level.
HOURLY ELLIOTT WAVE COUNT
With a fourth wave triangle looking like it is unfolding this session, the analysis of minor waves B and C is changed.
Minor wave B is reverted to a triangle, as originally seen as it ended. This is supported by MACD hovering on the zero line as it unfolded.
Minor wave C must subdivide as a five wave structure. It looks like it is unfolding as an impulse.
Within minor wave C, there is perfect alternation between the double zigzag of minute wave ii and the triangle unfolding for minute wave iv.
Minute wave iii is just 1.48 short of 1.618 the length of minute wave i. Within minute wave iii, the fifth wave is a swift strong extension; this looks very typical for Gold.
So far this wave count now follows most typical behaviour and structure for Gold.
If a small fourth wave triangle is completing, then a final short sharp thrust downwards for a fifth wave should follow. Gold’s fifth waves out of its fourth wave triangles are often surprisingly short. Minute wave v may be expected to be about 0.618 the length of minute wave i, which would see it end close to 1,170.
If this wave count unfolds as expected, then after minute wave v is complete a reversal should be expected. How high the next wave goes and the structure it takes may indicate which daily Elliott wave count is correct.
ALTERNATE DAILY ELLIOTT WAVE COUNT
This alternate wave count expects that the large upwards zigzag from the low of 1,046 in December 2015 to the last high of 1,374 in July 2016 is a complete correction. The trend is still down; Gold is still in a bear market.
If there has been a cycle degree trend change at the high labelled cycle wave b, then the new wave down must begin with a five wave structure. At this stage, there looks to be too much overlapping for an impulse, so a leading diagonal is considered.
Within leading diagonals, sub-waves 2 and 4 must subdivide as zigzags. Sub-waves 1, 3 and 5 are most commonly zigzags but sometimes may also appear to be impulses.
Within this structure, all sub-waves subdivide as zigzags. This wave count meets all Elliott wave rules. This diagonal looks correct.
This wave count has a lower probability at the daily chart level because leading diagonals are not very common structures for first waves. When first waves do subdivide as leading diagonals, they are most often contracting and not expanding. This wave count does not rely upon a rare structure, but it does rely upon a less common structure.
At the monthly chart level, if the zigzag up labelled cycle wave b is complete, then there are further implications. That means that the prior wave down to the low at 1,046 on December 2015 must be seen as a five wave impulse. This is possible, but it has a fairly low probability.
Primary wave 1 lasted 94 days. Primary wave 2 may initially be expected to last about a Fibonacci 55 or 89 days. It should be a big three wave structure.
At the hourly chart level, this alternate wave count would be essentially the same as the main hourly chart; minor wave C may still need one final fifth wave down to complete it.
At this stage, there is no divergence in expected direction between this alternate and the main wave count. The structure of upwards movement, if it is clearly a three or five, may assist to tell us which wave count is correct in coming weeks. For now this alternate must be judged to have a low probability due to the problems outlined. It is published to consider all possibilities.
SECOND ALTERNATE DAILY ELLIOTT WAVE COUNT
This alternate wave count also suffers from the same problems at the monthly chart level as the first alternate above. Seeing cycle wave a downwards as a five wave structure has problems of proportion and unusual behaviour with a base channel.
However, all possibilities should be considered.
What if a new bear market is underway for cycle wave c? The most likely structure would be an impulse. At this stage, price may be close to the middle of a third wave within primary wave 1 down.
This wave count has a problem of proportion at the daily chart level also: minute wave ii lasted 23 sessions and intermediate wave (2) three degrees higher lasted just 8 sessions. Lower degree corrections should be more brief than higher degree corrections. This is not always the case, but when the duration is substantially different then it must necessarily reduce the probability of the wave count.
The pink channel here is a base channel about minute waves i and ii. Price should continue to find resistance at the lower edge of the base channel now that it has breached the channel.
Within the middle of the third wave, no second wave correction may move beyond the start of its first wave above 1,220.66.
SECOND ALTERNATE HOURLY ELLIOTT WAVE COUNT
If an impulse is developing downwards, then the third wave within it would still be incomplete.
If current sideways movement labelled as a triangle for micro wave 4 is correct, then micro wave 5 may be surprisingly short. If the triangle is invalidated, then micro wave 4 may morph into a combination, and then micro wave 5 may again be expected to be a longer stronger extension.
Submicro wave (E) may not move beyond the end of submicro wave (C) at 1,189.79 for the triangle to remain valid.
If the triangle remains valid, then micro wave 5 may be about even in length with micro wave 1 giving a target about 1,170.
If the triangle is invalidated and micro wave 4 completes as a different corrective structure, then the target for micro wave 5 should be lower. At 1,146 subminuette wave iii would reach 2.618 the length of subminuette wave i.
Within subminuette wave iii, the correction for micro wave 4 may not move into micro wave 1 price territory above 1,206.77.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Last week completes with a smaller range and a substantial decline in volume. The fall in price is not supported by volume, so it is suspicious. It looks like bears are tired.
Price may find support here about 1,200.
On Balance Volume has come down to almost touch the yellow support line. There is a very little room for more downwards movement. This line should be expected to provide support and assist to halt the fall in price either here or very soon.
RSI is not extreme and does not exhibit divergence with price. There is room still for price to fall further.
Click chart to enlarge. Chart courtesy of StockCharts.com.
StockCharts data for the Gold cash market is New York session only data. With the NYSE closed for Thanksgiving Day today, there is no new data to analyse.
Today’s downwards day has support from volume.
The long lower wick is bullish. The lower wick ends at the lower edge of Bollinger Bands, but that does not mean a bounce should be expected right here. Price can remain at the extreme range of Bollinger Bands for several days when this market is trending.
There is some small divergence today with price and On Balance Volume: price has made a lower low, but OBV has made essentially an even low. This small divergence is bullish, but it is not enough for a strong warning.
The bullish divergence noted in last analysis with price and RSI has now disappeared. RSI today made a new low below the prior major swing low of the 7th of October. RSI may remain extreme for some time during a trending market, so there is room for further downwards movement here. With no short nor mid term divergence between RSI and price today, this indicator is not giving any warning of a low in place here.
There is though mid and short term divergence today between price and Stochastics. Stochastics had the last low on the 21st of November and today it has a slightly higher low. The low for Stochastics of the 6th of October has still not been exceeded, yet price has made lower lows. This is regular bullish divergence and indicates some weakness in price.
It would be clearer if RSI also exhibited mid or short term divergence. The fact that it does not does not mean price must continue lower. It is just a warning that the new alternate Elliott wave count must be taken seriously.
ADX is increasing. ATR is today increasing and Bollinger Bands are widening. All three of these indicators are today in agreement that this market is trending downwards.
Price is below both the short and mid term moving averages, and both are pointing downwards. The mid term trend is down. The long term trend may still be up though as the 200 day moving average is still pointing upwards.
This analysis is published @ 06:02 p.m. EST.