A small range inside day fits both Elliott wave counts, but the situation is no clearer.
Summary: If we expect the most common scenario to unfold, then we should be right more often than wrong. We will still be wrong sometimes, alternates are still possible, but this is an exercise in probability.
A new low below 1,225.11 would invalidate the alternate and provide some confidence that a high may be in place. It is very important though to also wait for the trend channel on the hourly charts to show a breach of the lower edge. If that happens, then enter short. The target is now at 1,137.
If price breaks above the upper edge of the trend channel, then the target for either a third or C wave up to end is about 1,273 – 1,277 in the first instance. Upwards momentum should increase and corrections should be brief and shallow.
Always use a stop for every trade. Do not invest more than 1-5% of equity on any one trade.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
MAIN ELLIOTT WAVE COUNT
This main wave count has a better fit for prior movement. To see the difference between this main wave count and the alternate below please refer to last historic analysis linked to above.
This main wave count expects Gold has had a primary degree trend change in December 2016. The new upwards wave is either a primary degree third wave, or a primary degree zigzag to complete a double zigzag.
At this stage, the degree of labelling within intermediate wave (2) is moved up one degree. Minor wave A is complete and now minor wave B may be complete. If this is correct, then minor wave C down should be relatively time consuming. Intermediate wave (2) at its end should be somewhat in proportion to intermediate wave (1), which lasted 30 days. Intermediate wave (2) is expected to last a Fibonacci 21 or 34 days. So far it has lasted ten.
Intermediate wave (2) is labelled as an incomplete expanded flat correction. These are very common structures. Within them their B waves make a new price extreme beyond the start of the A wave. B waves of expanded flats should exhibit clear and strong weakness.
The first in a series of second wave corrections for Gold’s new impulses is usually very deep. Intermediate wave (2) is expected to be at least 0.618 the depth of intermediate wave (1), and may be deeper. It may not move beyond the start of intermediate wave (1) below 1,123.08.
The pink channel about minor wave B needs to be breached, at least at the hourly chart level, for any reasonable confidence that minor wave B is over and minor wave C has begun. It is entirely possible that minor wave B may continue higher while price remains within the pink channel.
It is possible that intermediate wave (2) is over as a regular flat correction (this labelling can be seen on the alternate daily chart). There, the flat is labelled intermediate wave (B) and the labelling works in exactly the same way for intermediate wave (2).
If intermediate wave (3) is underway, then a reasonable target for it would be 1.618 the length of intermediate wave (1) at 1,336.
Minor wave B is now at 1.44 the length of minor wave A. There is unfortunately no rule stating a limit for B waves within flat corrections. There is a convention within Elliott wave that states the idea of a flat should be discarded when the B wave reaches twice the length of the A wave. That price point for this wave count would be at 1,256.81.
Most commonly B waves within flats are from 1 to 1.38 the length of their A waves. This is a common range, not a maximum. B waves may be longer than the common range.
When B waves are longer than the common range, then the appropriate target for wave C is 2.618 the length of wave A.
Price reacts downwards each time it touches the upper edge of the Elliott channel. Price bounces upwards each time it touches the lower edge. So far this channel is neatly showing where price is finding support and resistance. A downwards reaction may be expected either right here or very soon; price may come up for a slight new high first to more perfectly touch the upper trend line.
What happens on the next downwards reaction may indicate which wave count is correct.
A shorter term channel is drawn about the zigzag of minute wave y. This channel is almost breached. The pink channel still needs to be breached for reasonable confidence in a trend change. A breach is defined as at least one full candlestick below and not touching the lower edge of the channel.
If members are bullish and choose to ignore the possibility of an expanded flat here, then entering long, if price again touches the lower edge of the channel, would give a good entry point. Always use a stop and do not invest more than 1-5% of equity on any one trade.
ALTERNATE ELLIOTT WAVE COUNT
This alternate wave count expects that Gold is still within a bear market. Targets for new lows can be seen on weekly and monthly charts.
Within the bear market, a primary degree correction is underway.
Primary wave 2 is most likely to subdivide as a zigzag. Intermediate wave (A) is complete.
Today’s alternate idea (which fits for both wave counts) will be charted on this chart. If the correction for intermediate wave (B) is over (and for the main wave count this would be labelled intermediate wave (2) ), then this is what it would look like.
Intermediate wave (A) would have lasted 23 sessions. Intermediate wave (B) would have lasted only eight sessions and been a shallow 0.393 correction of intermediate wave (A). This is possible, but it would be unusually brief and shallow (particularly for a second wave).
The target expects the most common ratio for intermediate wave (C) and the most common depth for primary wave 2.
Within intermediate wave (B), no second wave may move beyond its start below 1,181.41.
A base channel is added to the start of intermediate waves (A) and (C).
Second wave corrections are usually very deep and third waves should have the power to break above the upper edge of a base channel. This is how minor wave 3 within intermediate wave (A) behaved, and this looks typical. So far, if another impulse upwards is underway, minor wave 3 has not yet had the power to break above the new base channel. This is not typical. This is unusual. If, for the main wave count, this idea sees a third wave within a third wave up beginning, the lack of power with price remaining within the base channel is concerning.
If price does break above the base channel, then expect corrections thereafter to be very brief and shallow, and upwards momentum to increase strongly. At that stage, long positions may be entered with a stop just back inside the base channel.
Primary wave 2 may not move beyond the start of primary wave 1 above 1,374.81.
If Gold is within an impulse up (and this would be labelled intermediate wave (3) for the main wave count), then the third wave labelled minor wave 3 is unlikely to be over.
It would have begun with two overlapping first and second waves. Minute wave iii would be incomplete. When it is done, then minute wave iv may not move into minute wave i price territory below 1,225.11.
The base channel is the same as the channel on the main hourly chart. For this wave count, the power of minor wave 3 should break above the upper edge of the base channel and afterwards that trend line should offer support.
If price does break above the upper edge of this channel, that would substantially increase the probability of this wave count.
Click chart to enlarge. Chart courtesy of StockCharts.com.
The bearish engulfing candlestick pattern of last week has failed. Price has made a new high.
Since four weeks ago, volume is overall declining. Price is still finding strong resistance about 1,225.
On Balance Volume has bounced up off the yellow support line. Next resistance is some distance away at the purple line. Another breach of the yellow line would be a weak bearish signal.
RSI is not extreme and exhibits no divergence with price. There is plenty of room for this market to continue higher, or lower.
ADX is strongly declining, indicating a consolidation. The -DX line remains above the +DX line, so at this stage a downwards trend would be indicated if ADX turns upwards.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price is now finding strong resistance about 1,240. For Stockcharts data, the high for this session at 1,237.50 is exactly the same as the high for the prior session forming a double top. Price continues to find resistance about the yellow trend line.
Today completed an inside day and the balance of volume for the session was upwards. Volume is lighter than the prior day; upwards movement during the session did not have support from volume. This is now the case three days in a row. This supports the main Elliott wave count.
On Balance Volume has now come up to touch resistance. This line is only tested twice before, so it does not have strong technical significance but may offer some resistance. If OBV reacts lower tomorrow, the significance of the line would be increased and a bearish signal would be offered. Resistance by OBV supports the main Elliott wave count.
RSI is not yet overbought. There is room for upwards movement to continue. There is no longer divergence between price and RSI at highs to indicate any weakness. This supports the alternate Elliott wave count.
ADX still indicates an upwards trend in place, which is not yet extreme. There is room for this trend to continue. This supports the alternate Elliott wave count.
There is still divergence between price and Stochastics, and Stochastics is overbought. This supports the main Elliott wave count.
Bollinger Bands may be beginning to widen, but they are still fairly tightly contracted. This also supports the main Elliott wave count.
Price has closed above the upper edge of Bollinger Bands for the last two sessions. A reversion to the mean expectation would support the main Elliott wave count.
Overall, there is more support from this classic analysis for the main Elliott wave count than the alternate.
This analysis is published @ 08:00 p.m. EST.