Downwards movement was expected for one to three days towards the target. Upwards movement is finding resistance about the upper edge of the channel, with a strong overshoot.
Summary: With its structure so far incomplete and with the new low, I have more confidence today in expecting the final fifth wave to unfold downwards. The target remains at 1,136. If price reaches this first target and keeps dropping, or if it gets there and the structure is incomplete, then a second target is at 1,123. Overall, this downwards wave should last another one to three days. When it is done a bigger second wave correction should begin which may last three or five days.
Click on charts to enlarge.
Main Daily Wave Count
This main wave count sees Gold as still within a primary degree downwards trend, and within primary wave 5 intermediate wave (3) has begun. At 956.97 primary wave 5 would reach equality in length with primary wave 1. For Silver and GDX this idea, that the primary trend is down, is the only remaining wave count. This main wave count has a higher probability than the alternate below.
Within cycle wave a primary wave 1 lasted a Fibonacci 3 weeks, primary wave 2 lasted 53 weeks (two short of a Fibonacci 55), primary wave 3 lasted 37 weeks (three more than a Fibonacci 34), and primary wave 4 lasted 54 weeks (one short of a Fibonacci 55).
Primary wave 5 is now in its 36th week and the structure is incomplete. The next Fibonacci number in the sequence is 55 which would see primary wave 5 continue for a further 19 weeks, give or take up to three either side of this number. Although I am expecting primary wave 5 to be equal in length with primary wave 1 that does not mean it must also be equal in duration.
The maroon channel about cycle wave a from the weekly chart is now breached by a few daily candlesticks and one weekly candlestick. If cycle wave a is incomplete this channel should not be breached. The breach of this channel is a warning this wave count may be wrong, and so I will still retain the alternate.
Draw the maroon trend line on a weekly chart on a semi-log scale, and copy it over to a daily chart also on a semi-log scale (see this analysis for a weekly chart).
To see daily charts showing the whole of intermediate wave (1) from its start at 1,345.22, and an explanation of why this main wave count has a higher probability than the alternate, see the last analysis showing charts to that point here.
A new low below 1,131.09 would confirm that intermediate wave (3) down is underway.
Within intermediate wave (3) no second wave correction may move beyond its start above 1,308.10.
Within intermediate wave (3) minor wave 1 is a completed impulse lasting 18 days. Minor wave 2 is a completed double flat correction which lasted 9 days, exactly half the duration of minor wave 1. Because this is a second wave correction within a third wave one degree higher it is more shallow than normal due to the strong downwards pull of intermediate wave (3).
Minor wave 3 may total either a Fibonacci 21 or 34 days, depending on how long the corrections within it take. So far it has lasted 11 days. At 1,055 minor wave 3 would reach 1.618 the length of minor wave 1. Minor wave 3 may only subdivide as an impulse, and so far within it minute wave i only is almost complete.
Draw a base channel about minor waves 1 and 2. Minor wave 3 should have the power to break through support at the lower edge. Along the way down upwards corrections should find resistance at the upper edge. While the lower edge is not breached (so far it is only overshot and not clearly breached) the alternate wave count should be considered as a possibility.
Since the top labelled intermediate wave (2) volume is still strongest on down days.
I will be looking for divergence to develop over the next few days with price moving lower and On Balance Volume beginning to move slightly higher. If that happens OBV would support the wave count. If it does not happen then the final fifth wave may be longer in length and duration than expected.
So far downwards movement from the end of minuette wave (iv) looks clearly like a three wave movement, and I don’t think it is possible to see minuette wave (v) over at the low.
The strong whipsaw which occurred during Tuesday’s session completed an expanded flat correction for subminuette wave ii. Within subminuette wave ii micro wave B is 208% the length of micro wave A, and micro wave C is just 0.81 short of 2.618 the length of micro wave A. The subdivisions fit perfectly. Although micro wave B is slightly longer than twice the length of micro wave A this is acceptable if the subdivisions fit. Within flat corrections B waves are very rarely longer than twice the length of their A waves, but there is no rule stating how long a B wave may be.
I would expect to see a small increase in downward momentum for subminuette wave iii. A very short term target for subminuette wave iii may be at 1,137 where it would reach equality in length with subminuette wave i.
Along the way down upwards corrections should continue to find resistance about the upper edge of the green channel. Although subminuette wave ii overshot the channel, the channel is not breached (no full hourly candlestick is above it and not touching it).
If subminuette wave iii ends about the target then the final fifth wave may either be very short reaching the first target for minute wave i, or it may be extended and reach the second target for minute wave i.
At 1,136 minuette wave (v) would reach equality in length with minuette wave (i). If this first target is met and price keeps dropping, or the structure is incomplete, then I will use the second target. At 1,123 minuette wave (v) would reach 0.618 the length of minuette wave (iii).
If minute wave i ends in another two sessions it would total a Fibonacci 13 sessions, which would be typical behaviour for Gold. This will at this stage be my expectation, give or take one day either side of this.
Within subminuette wave iii no second wave correction may move beyond its start above 1,160. If this invalidation point is breached it does not mean minuette wave (v) and minute wave i are complete because it may be that my labelling within minuette wave (v) is wrong and subminuette wave ii is moving higher. Only a new high above 1,164.20 would provide price confirmation that minute wave i is over.
This hourly chart is exactly the same wave count as the first hourly chart. I am zooming out to show the entire structure of minute wave i so far.
Draw the channel using Elliott’s second technique. Draw the first trend line from the ends of minuette waves (ii) to (iv), then place a parallel copy on the end of minuette wave (iii). In this instance if minuette wave (v) is slow moving then it may move along and end in the mid line of the channel.
If minuette wave (v) is faster moving then it may end at the lower edge of the channel.
Along the way down upwards corrections should find resistance at the upper edge of the channel.
If the lower edge of the channel is breached and downwards momentum builds, then there is a possibility that minuette wave (v) may be a swift strong fifth wave, typical of commodities. If that happens it may end at the second, lower target at 1,123.
When the channel is clearly breached by upwards movement then the final fifth wave may be expected to be over and the next movement, minute wave ii, should be underway. At that stage a new high above 1,164.20 would provide price confirmation that minute wave ii is underway.
When this final fifth wave is over that would complete a five wave impulse down for minute wave i. The next correction for minute wave ii should show up clearly on the daily chart, lasting either a Fibonacci three or five days. If it gets that high it should find strong resistance, and not breach the upper edge of the blue base channel copied over here from the daily chart. It may not move beyond the start of minute wave i above 1,223.33.
Alternate Daily Wave Count
At this stage I judge this alternate wave count to have a lower probability. The structure of downwards movement, and momentum, will determine which wave count is correct over the next few weeks. At this stage they both expect more downwards movement so there is no divergence in the expected direction.
This wave count sees a five wave impulse down for cycle wave a complete, and primary wave 5 within it a completed five wave impulse. The new upwards trend at cycle degree should last one to several years and must begin on the daily chart with a clear five up.
The first five up may be a complete leading expanding diagonal. Within leading diagonals the second and fourth waves must subdivide as zigzags. The first, third and fifth waves are most commonly zigzags but they may also be impulses. This wave count sees minor waves 1, 3 and 5 as zigzags.
Leading diagonals are almost always followed by deep second wave corrections, sometimes deeper than the 0.618 Fibonacci ratio. Intermediate wave (2) is now deeper than the 0.618 Fibonacci ratio and the structure of minor wave C is close to completion.
For this alternate wave count minor wave C down must subdivide as a five wave structure. The hourly chart would see the subdivisions exactly the same as the main wave count above, so to keep the number of charts at a minimum I will publish only for the main wave count. For this alternate minor wave C may not exhibit a Fiboancci ratio to minor wave A.
Minor wave C is overshooting the lower trend line. Sometimes C waves do this. It is close to an end. When minute wave i for the main wave count can be seen as a completed five wave structure then this alternate would see minor wave C as complete. The price point which differentiates the two daily wave counts at that stage will be 1,223.33. This alternate will require movement above 1,223.33 and the main wave count would be invalidated with movement above 1,223.33.
Intermediate wave (3) must move beyond the end of intermediate wave (1) at 1,308.10.
Intermediate wave (2) of this new cycle degree trend may not move beyond the start of intermediate wave (1) below 1,131.09. Any breach of this price point by the smallest amount, even intra minute, would invalidate this wave count fully.
This analysis is published about 02:22 p.m. EST.
Such a shift in gold up big and the US dollar down big and stocks up big, I won’t buy anything until Lara analysis even though DUST/JDST appears to be heavily discounted. Else might equally wake up to a gold rally and channel breach instead of a drop. Especially since gold down 10 out of 13 days since gold reached up to 1,223.32 on March 2nd.
Best to wait for Lara full analysis and evening Gold news video and perhaps let gold circle the world overnight to adjust to the surprising FED FOMC news. Interesting when the best thing that happened to you is that you didn’t lose any money. Reminds me of Warren Buffet’s two rules he gives to the companies that Berkshire Hathaway takes a part ownership in.
One of the most famous quotes accredited to Buffett is the following: “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.”
I don’t think minute ii is over yet. working on it now
Lara,
Did minute wave ii just end already at 1,175.84 at 3:13 pm? If so than that was a fast 3 to 5 days compressed into 75 minutes? Looking to buy DUST!
Ditto, would be good to get in the the pullback.
I’ll wait for anything, a comment or analysis from Lara that minute wave ii likely over and down trend intact then buy DUST. Although I may be rushing things as FED FOMC news hasn’t even circled the world for their gold and US dollar reaction yet.
Gold reaction even surprised me and I was long 7000 units. I expect a pull pack
I have bought. Will see how things unfold from here, but I would expect a pullback over night.
Dont forget you guys, the LBMA is taking over the London Fix for gold this Friday, thought they say it shouldn’t affect price much. ??
well guess i should be grateful i got stomped out of DUST yesterday!
wanted to follow mortgagefree but couldn’t bet on it. Congrats mortgagefree.
Yes very grateful stomped out of DUST, now you can go discount shopping.
LOL
Thanks Pal. On a obscene run at this time – luck always runs out though. And it is luck.
DUST lost $3.50 or 17 % in 24 minutes from 1:58 at 21.20 down to 17.70 at 2:22 pm. Ouch, glad I wasn’t in DUST. Minute wave ii may take one to three days to peak and should stay below 1,180 strong resistance area on daily chart blue base channel. That should be a great place to buy back into DUST or whatever near term high Lara gives us tonight even if it may be in after hours.
It may of been good time to buy JNUG/GDX again one minute ago?
Is anyone planning on buying JNUG? IF so, what is your target price?
When the channel is clearly breached by upwards movement then the final fifth wave may be expected to be over and the next movement, minute wave ii, should be underway.
At that stage a new high above 1,164.20 would provide price confirmation that minute wave ii is underway.
Lara – how long duration for wave ii?
Just made an absolute killing in JNUG…
I guess the shorts are in the boon docks now with 1197-98 to play for…
Gold just spiked up $16 in 8 minutes from FED FOMC 2:00 news.
http://www.marketwatch.com/newsviewer
Now will it breach upper trend line of green hourly channel for 1 full hour?
Requires a break below 1147 with 1143/42 seen as holding; upside 1157/58 seen as limiting with 1161/63 on the outside, requires a break above 1156…. Routing for the downside to play out!
Morgan Stanley: There are three points in focus: First, the Fed will take the word ‘patient’ out of the statement trying to regain flexibility. Markets have priced in this likely change. Consequently, its supportive impact on the USD will be minor. Second, the Fed will update its dots. Third, the Fed may consider the impact the higher USD has on import prices. Latest statements referred to “international risks” where USD strength plays….Should the Fed refer to import prices and the valuation of the USD explicitly, then the market would conclude that ‘the Fed is having an issue with current USD upward momentum’. Hence, the USD may experience some vulnerability around the release of the Fed statement
At 12:00 gold appears to have just finished a five wave up to 1,153.75.
Maybe that was a wave iv of minuette iii, just a guess?
I think that is the c wave of micro 2 of subminuette 3 of minuette 5. My computations call for 1154.15 but I bought in some anyway, just in case I am wrong. If I am right, I can continue to scale in.
it is too early to buy NUGT for corrective wave iv?
I went into DUST first, expecting further drop for micro 3. JDST seems to be laggy today. Once price reaches 1136, then will I consider JNUG. NUGT also appears to be slow today. Anybody has a different perception, please feel free to let me know.
Fed Set to Remove PATIENT and HIKE in june
http://www.fxstreet.com/analysis/strategic-currency-briefing/2015/03/18/
I am trying to see if there is any way to label wave 5 so that it is over at or before the 2 pm Fed statement. What if wave 5 started on March 12 and is an ending contracting diagonal? If we consider wave 4 on March 17 to be brief (less than 1 hour), then we are now either in wave 5 or wave 5 completed early this morning. Comments?
I will still stand by Lara’s version as it makes sense. It has undergone rigorous testing and she is very cautious. That adds credibility.
Timing is one of the most difficult part of any technical analysis. While there are thousands of publications pertaining to price, extremely few have been on timing. The best I have come across use Fibonacci or Lucas numbers.
Anyway, if you twist my arms, I would say that wave 5 may end during or after Yellen’s testimony but definitely not before. If there are plenty of fireworks, the wave movement is accelerated. If the tone is passive and neutral, it will slowly chug along.
Are you expecting 2 pm FED FOMC news to move Gold UP in a new minute wave ii starting then?
I feel that minute 1 can come to a quick conclusion only if there are fireworks. This can occur if FOMC takes a particularly hawkish tone and set a date for the rate hike early, say in June or August. If Yellen senses that there is market turmoil, she may try to soothe the nerves during the press conference. Then, price would reverse course and minute 2 will be underway.
This is only my reading of the situation. There are too many conditions to be satisfied. Do take it with a pinch of salt. Sentiment is a rather weird animal. It is very capricious indeed.
Tham
If Janey Yellen takes patient out of news and actually sets an interest rate hike date to start this year, I believe the US dollar goes up and the US stock market and Gold goes down as would be first interest rate hike since great recession in 2008/9 and gold earns no interest and US dollar going up outs pressure on gold since priced in US dollars.
Here is super fast site with US news.
http://www.marketwatch.com/newsviewer
Some only headlines, some have story.
Agreed. That is precisely the point I am making. With hyperactive traders hinging far too many trades on this, as well as the herd that follows, it is no surprise if the drop proves to be sudden. But, see also my read on what may happen during the press conference.
I did read that part. However I think that once the FED makes decision and releases news they won’t change it until next Fed FOMC but as you say some central banker may have some comments. I think that might be after the fact like days later.
It is my experience that whenever the Fed meets (8 times a year), and especially during the quarterly ones where there is a press conference following, markets tend to go one direction very quickly when the gist of the meeting is being released at 2 pm. After a while, sometimes on the same day, sometimes on the following day, the market decision is quickly reversed. Hence, my conjecture that minute 1 may end today especially after the Fed loses “patience”. Then when it reverses, minute 2 can take off.
I do not have any expectation on the FOMC news and I do not know what the market’s reaction might be to the news. However, if EW has only one viable path then I would have confidence.
Looking at EW, we have Lara’s main saying we are in a subwave 5 down of a larger 3 down. However, she has an alternate that has a wave 3 up that could start soon. This is the ultimate “on the fence” problem with wave 3 power potentially in either direction. If you add to that the possibility that we are in an ending diagonal for the subwave 5, then the risk of an explosive upmove increases.
fencepost –
Good point that FOMC news happening right at the deciding point between main daily down and alternate daily up.
I will put more value in that, however I was still expecting main wave down and today’s news could decide the direction for a few days but the longer term down continues.
I hold no Gold products and will buy into the trend from FOMC 2 pm news.
As they say “Don’t Fight The Fed”
Trendlines would not be respected and wave 5 would be truncated if it ended this morning. And the trendlines would not be converging much. Not my case.
Amazing analysis and video today Lara. Thanks a lot :o)
Can anyone point me in the right direction? (I know Lara can get busy and has good participants in here)
Would you happen to know where it is that the elementary
statements of determining the start and end of a wave show up in EWP? For example, not rules governing a specific form(zigzag/flat/triangle) or degree of wave– but how price makes the wave itself. I mean, one can’t say
as soon as price changes direction the wave count must change. Oh, please don’t tell me its relative to the structure i’m in, lol.
And are line charts being used to count or candlestick
charts?
I have to take care other financial matters right now (bad Dust! just kidding) but will check in later. Hope someone can direct me.
It may be page 70-78 in EWP where you may find answers to these questions. But after that there is the art of Elliott Wave Analysis, that looks way beyond mere rules and calculation. And then there are geniuses in that art – like Lara – who do not need to ask those questions, but have it in their blood, simply”recognize the right look”. Hope I do not tell too foolish things.
Thank for the direction but I haven’t found it yet. Haven’t found anyone that can put it into words– I bet Lara can.
Hi dsprospering. I analyse on the premise that EW provides the road map. Indicators and candlesticks tell you when there is a change in direction in the road ahead.
I use mainly technical analysis to determine when a wave changes direction. The overall picture can be obtained using a trendline break. Please refer to the diagram appended. It works for any timeframe. For example, for the first wave down (upper left hand corner), you simply draw a trendline yourself for that wave. You can see that it works very well.
For more precise location (but you got to be gungho to use these because the chances of error in interpretation are there), I use fast stochastics coupled with candlestick patterns. Fast stochastics indicating bullish crossover for a change of trend up, and similarly bearish crossover for the trend down. Stochastics is a leading indicator meaning that it leads prices, and in my experience the fast version is more timely than the slow or normal versions (which usually lag by two or three candlesticks). For this reason, I don’t like to use RSI or MACD for intra-day trading; they are lagging indicators. There are numerous candlestick patterns that are highly indicative of a trend change. You just need to be able to recognise them.
These have greatly helped my intra-day trading, Hope it works for you too.
Dear Tham,
Thanks for taking the time to respond to me.
Did you mean to attach a diagram? I don’t see it appended. Maybe you can edit and attach.
I don’t know. It is in my version. Maybe you have to refresh your computer. Sometimes happens to me too.
you are so right! thank you
Lara, I seem to have run across an inconsistency and do not know which note is the correct one regarding B wave.
March 13th says :…(neither have)… “B waves 90% or more the length of their A waves, so neither of these corrections are flats”….
March 17th says: “Within flat corrections B waves are very rarely longer than twice the
length of their A waves, but there is no rule stating how long a B wave
may be.”
Should the March 13th be read with different punctuation maybe? “Neither subminuette waves w nor y have B waves 90% or more the length of their A waves. So neither of these corrections are flats and they would both be zigzags”… ???
Because it appears March 13th is indicating that 90% of the A wave is a requirement for a flat.
Please clarify for me. I’m just trying to get my study notes correct. Thanks
EWP 10-th ed. p 89 gives the 4-th rule for flats as “Wave B always retraces at least 90 percent of wave A.” So there appears to be a rule on the minimum length of a B wave but no rule regarding the maximum length of a B wave.
That’s the Rule. As added in the guidelines Wave B usually retraces 100 and 138 percent of wave A.
Lara always points out the Rule and guidelines in reference to expanded flat.
Thanks for suggesting the EWP book.
thank you fencepost. In hindsight I should have looked that up.
Would you happen to know where it is that the elementary statements of determining the start and end of a wave show up in EWP? For example, not rules governing a specific form(zigzag/flat/triangle) or degree of wave– but how price makes the wave itself. I mean, one can’t say as soon as price changes direction the wave count must change. Oh, please don’t tell me its relative to the structure i’m in, lol.
And are line charts being used to count or candlestick charts.
I do not know any clear way to know when a wave starts. I think it is like doing a puzzle and sometimes there is more than one solution.
The EWP book seems to use bar and line charts. I like to use bar charts. Others like candlesticks. Whatever you choose, it takes a lot of practice for your eye and brain to get good at seeing the patterns.
i think i’m seeing them naturally. I was just looking for someone that’s put it into words. Haven’t found it in EWP yet. Thanks for your response.