Upwards movement was expected for Friday’s session.
An inside day closed green.
Summary: A very slight new high to 1,308 on Monday may complete an impulse up for a third wave. This may be followed by a few days of sideways movement for a fourth wave, which should remain above 1,264.72. The fourth wave correction should be shallow.
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
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, ii, iii and iv may be complete.
Minute wave iii is very slightly shorter than minute wave i; minute wave i is 35.96 in length and minute wave iii is 35.68 in length. This limits minute wave v to no longer than equality in length with minute wave iii, so that the core rule stating a third wave may not be the shortest is met. This limit is at 1,321.85.
When minute wave v completes the impulse of minor wave 3, then minor wave 4 may unfold sideways for a few days. Minor wave 4 may find support at the upper edge of the blue base channel drawn here about minor waves 1 and 2.
Minor wave v may be extended.
HOURLY ELLIOTT WAVE COUNT
Minute wave ii was a shallow 0.34 zigzag lasting 22 hours. Minute wave iv is a deeper 0.59 regular flat correction lasting 18 hours. The alternation is perfect and the proportion is exceptionally good.
Minute wave iii has stronger momentum and volume than minute wave i.
This wave count so far looks almost textbook perfect. The only concern is that minute wave iii would be very slightly shorter than minute wave i; minute wave i was 35.86 in length and minute wave iii was 35.68 in length. They are almost even, but now minute wave v is limited.
Fifth waves most commonly exhibit Fibonacci ratios to their counterpart first waves. Minute wave v may be close to even in length with minute wave i, but it may more likely be closer to 0.618 the length of minute wave i at 1,308.
Minute wave v may end midway within the channel.
At the end of Friday, it looks like minute wave v may be unfolding as an ending contracting diagonal. All the sub-waves must subdivide as zigzags within an ending diagonal. Ending contracting diagonals are reasonably common structures. It is extremely unusual for an ending diagonal to end in a truncation, so it is highly likely that minute wave v will end with at least a slight new high above the end of minute wave iii at 1,307.09. The target at 1,308 would achieve this.
The diagonal may be expected to be complete when price overshoots the (i)-(iii) trend line. If this happens and then price quickly reverses, then it would look like minor wave 3 is over and minor wave 4 would begin there.
It is also possible to move the degree of labelling within minute wave i all down one degree. This alternate idea would remove the problem of minute wave iii being slightly shorter than minute wave i, so only minuette wave (i) within the impulse of minute wave iii may be complete. This alternate idea would see minute wave iii as extending further. At 1,344 minute wave iii would reach 1.618 the length of minute wave i.
If price moves up strongly and makes a new high above 1,321.85, then the alternate idea would be correct and the target would be about 1,344. The invalidation point for this idea is the same.
Within minute wave v, no second wave correction may move beyond the start of its first wave below 1,286.17. As soon as minute wave v looks complete, then the invalidation point must move down to the end of minor wave 1 at 1,264.72.
ALTERNATE DAILY ELLIOTT WAVE COUNT
This wave count sees a correction downwards as incomplete.
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 now be complete. Gold may see a sharp reversal and a new wave down. At 1,207 minor wave C would reach equality in length with minor wave A. Minor wave C would be very likely to make at least a slight new low below the end of minor wave A at 1,242.87 to avoid a truncation.
At this stage, a new low below 1,286.17 would invalidate the main wave count and provide some confidence in this alternate.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
Labelling within minor wave B is today changed to be the same as labelling for the main wave count. A-B-C of a zigzag subdivides 5-3-5, exactly the same as 1-2-3 of an impulse.
When the ending diagonal is complete, then how low the next wave goes should indicate which wave count is correct. If price makes a new low below 1,264.72, then this alternate wave count would be confirmed.
When minor wave B may be again over, then a target downwards for minor wave C may be calculated. Minor wave C would be expected to most likely be about even in length with minor wave A, which was $100.51.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Following bullish divergence between price and RSI (yellow lines), price has been moving upwards for three weeks on increasing volume.
RSI at the weekly chart level is above 50, which is bullish. It has a long way to go before it would reach extreme, so there is plenty of room still for price to rise.
Price is finding some resistance at an area of prior support at 1,305 – 1,310. If price can break above 1,310 next week, that would be a strong bullish signal. The next line of resistance would then be about 1,350.
Click chart to enlarge. Chart courtesy of StockCharts.com.
StockCharts data has a slightly higher high and a higher low for Friday’s session. Overall, price moved upwards.
The doji candlestick indicates indecision, a balance of bulls and bears. This session looks like a small consolidation within the trend.
Volume was slightly lower for Friday, which fits the candlestick pattern.
All three moving averages are now pointing upwards. There is clearly an upwards trend in place currently for Gold.
ADX has again increased. It indicates an upwards trend.
ATR slightly declined for Friday. This also fits with the candlestick pattern. A small consolidation within the trend may have unfolded during Friday’s session.
Bollinger Bands continue to widen. Price has now closed at or just above the upper edge of Bollinger Bands for three sessions in a row. It is likely at this stage that a small consolidation may unfold sideways for a few days to bring price back within the Bollinger Bands. This expectation fits very neatly with the Elliott wave count.
On Balance Volume gives another bullish signal with a move up and away from support now at the purple line. This line may offer enough support to force a correction here to be relatively shallow, also fitting neatly with the Elliott wave count.
This analysis is published @ 02:40 a.m. EST on 5th November, 2016.