Downwards movement unfolded and remains above the invalidation point.
Summary: The picture is less clear today. But the invalidation point is very close by, so we may have clarity soon. Assume the trend most likely remains upwards while price remains above 1,264.72. Look out for a strong extended fifth wave upwards. If price makes a new low below 1,264.72, then look out for a strong third wave down.
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 wave 4 has moved lower today and may now be very close to an end. This wave count will remain valid while minor wave 4 remains above minor wave 1 price territory.
Minor wave 4 may not move into minor wave 1 price territory below 1,264.72.
Fourth waves are not always contained within channels. This is why Elliott developed a second technique to redraw the channel when the fourth wave breaches it. Draw the channel with the first trend line from the ends of minor waves 2 to 4, then place a parallel copy on the end of minor wave 3. The upper edge may show where minor wave 5 finds resistance.
HOURLY ELLIOTT WAVE COUNT
Minor wave 2 was a deep 0.78 single zigzag. Minor wave 4 now exhibits very little alternation as a deep 0.63 double zigzag. This has today reduced the probability of this wave count.
Minor wave 4 may end here very close to the 0.618 Fibonacci ratio of minor wave 3.
The pink channel is a best fit about minor wave 4. When it is breached by upwards movement, it may be the earliest indication of a possible trend change. A new high above 1,289.50 today would invalidate the alternate wave count below and provide some confidence in this main wave count.
If it continues any lower, minor wave 4 may not move into minor wave 1 price territory below 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 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 1,264.72 would invalidate the main wave count and provide some confidence in this alternate.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
Upwards movement for minor wave B is seen in exactly the same way as upwards movement 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.
Thereafter, the wave counts diverge.
If price makes a new low below 1,264.72, it cannot be a fourth wave correction within a continuing impulse. So at that stage the upwards movement must be over and would most likely be a three wave structure. With a three wave structure upwards, that would indicate the trend remains down.
Minor wave C may have begun with a series of overlapping first and second waves. Minor wave C must subdivide as a five wave structure, and so far it looks like it may be unfolding as an impulse.
The upwards spike labelled subminuette wave ii overlaps back into minuette wave (i) price territory, so this spike may not be minuette wave (iv). The degree of labelling within movement down from the high labelled minuette wave (ii) is moved down one degree. For this wave count today another overlapping first and second wave may be complete.
This wave count now has three overlapping first and second waves. It now expects to see a strong increase in downwards momentum as the middle of a third wave unfolds downwards.
The ends of any one of subminuette wave iii, minuette wave (iii), minute wave iii or even minor wave C may end with selling climaxes. Gold often exhibits particularly strong fifth waves. If this wave count is confirmed, then look out for surprises to the downside.
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, 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.
Another reasonably strong downwards day comes with a decline in volume. The fall in price is not supported by volume, so it should be suspicious. Price may now be at support at the blue line. This supports the main Elliott wave count over the alternate.
On Balance Volume did not find support at the purple trend line and has broken below this line. This gives a bearish signal and supports the alternate Elliott wave count. OBV may now find support at the yellow line, but this is some distance away.
RSI is still close to neutral. There is plenty of room for price to rise or fall.
Stochastics is returning from overbought.
ADX today indicates a potential trend change: the -DX line has crossed above the +DX line. ADX does not yet indicate a new trend: the ADX line is still declining.
ATR is increasing still as price now falls for two days. It is possible that this could be the very early stage of a new downwards trend.
Bollinger Bands do not yet indicate a trend as they are flat to slightly contracting as price moves lower.
These three indicators give very mixed signals today. It is not clear enough to conclude there is a downwards trend.
Price has reverted to the mean of the Bollinger Bands after closing above the upper edge for the last four days of upwards movement. This mid line along with the blue trend line may provide support for price here.
This analysis is published @ 07:10 p.m. EST.