Yesterday the main hourly wave count expected more upwards movement towards a short term target at 1,270. Price has reached up to 1,272.71 but breached the parallel channel on the hourly chart with downwards movement first.

Summary: The situation is still unclear, but the range which we need to see price break out of is now much narrower. Movement above 1,272.71 would expect more upwards movement to a target at 1,314. Movement below 1,257.04 would expect more downwards movement to one of two targets at 1,222 or 1,191..

Click on the charts below to enlarge.

Gold is still within a large fourth wave correction at primary wave degree which is incomplete. To see a full explanation of my reasoning for expecting that primary wave 4 is not over and is continuing see this.

Movement above 1,277.97 would provide confirmation that primary wave 4 is not over. At that stage upwards movement could not be a fourth wave correction within primary wave 5 because it would be in its first wave price territory, and the downwards movement labeled intermediate wave (X) would be confirmed as a completed three wave structure.

Primary wave 2 was a rare running flat correction, and was a deep 68% correction of primary wave 1. In order to show alternation in structure primary wave 4 may be a zigzag, double zigzag, combination, triangle or even an expanded flat. We can rule out a zigzag because the first wave subdivides as a three. This still leaves several structural possibilities.

Primary wave 4 is most likely to be a combination or triangle in order to show structural alternation with the running flat of primary wave 2.

The downwards wave labeled intermediate wave (X) is 99% the length of the upwards wave labeled intermediate wave (W). Primary wave 4 is unlikely to be a flat correction because if it were it would be a regular flat. These have similar behaviour and a similar look to running flats, and so there would be little structural alternation between primary waves 2 and 4.

Primary wave 4 is most likely to be a combination rather than a double zigzag because of the depth of intermediate wave (X). Double combinations take up time and move price sideways, and their X waves can be very deep. Double zigzags are different because their purpose is to deepen a correction when the first zigzag does not move price deep enough, so their X waves are not normally very deep. Thus intermediate wave (Y) is most likely to be a flat correction, and less likely a triangle and least likely a zigzag. It is most likely to end about the same level as intermediate wave (W) at 1,434 so that the whole structure moves sideways. It may last about 43 to 89 days, depending upon what structure it takes.

If intermediate wave (Y) is a flat correction then within it minor wave B must retrace a minimum of 90% the length of minor wave A, and it may make a new low below 1,180.84.

If intermediate wave (Y) is a flat correction then within it minor wave A must subdivide as a three wave structure. At this stage it looks like minor wave A may be unfolding as a zigzag because minute wave a within it completed as a leading diagonal which is a five wave structure. If minute wave b within this zigzag is over then at 1,314 minute wave c would reach equality in length with minute wave a.

Primary wave 4 may not move into primary wave 1 price territory. This wave count is invalidated with movement above 1,532.90.

Hourly Main Wave Count.

My analysis of the upwards movement labeled minuette wave (i) was wrong. It was a completed structure and this was confirmed with a clear breach of the small channel drawn about it on yesterday’s hourly chart.

This main hourly wave count sees minute wave b as over in three days as a double zigzag. Minute wave c may have begun.

Within minute wave c we may now have minuette waves (i) and (ii) complete, although I may move this labeling down one degree if the next upwards wave is not extended.

Within minuette wave (iii) subminuette wave i is complete. If subminuette wave ii moves any further it may not move beyond the start of subminuette wave i below 1,257.04.

At 1,314 minuette wave (iii) would reach 1.618 the length of minuette wave (i).

If price moves above 1,272.71 the alternate below would be invalidated and this main hourly wave count would be confirmed.

Hourly Alternate Wave Count.

It is entirely possible that minute wave b was not over in a brief three days and is continuing further as a very common expanded flat correction. At this stage I do not favour either the main or alternate hourly wave counts; I would judge them to have about an even probability.

This alternate hourly wave count moves the degree of labeling within minute wave b down one degree. The double zigzag downwards may have been only minuette wave (a) within minute wave b.

Minuette wave (b) upwards is now a very clear three wave structure. It may be over there, and was a 131% correction of minuette wave (a).

At 1,222 minuette wave (c) would reach 1.618 the length of minuette wave (a). If downwards movement keeps falling through this target, or when it gets there the structure of minuette wave (c) is incomplete, then the next target is at 1,191 where minuette wave (c) would reach 2.618 the length of minuette wave (a).

Within minuette wave (c) no second wave correction may move beyond the start of its first wave. This wave count is invalidated with movement above 1,272.71.

Alternate Daily Wave Count – Triangle.

It is also possible that primary wave 4 may continue as a regular contracting (or barrier) triangle.

The expected direction of this next upwards wave is the same, but for this alternate intermediate wave (C) of the triangle may not move beyond the end of intermediate wave (A). The triangle is invalidated with movement above 1,438.83.

Intermediate wave (C) must unfold as either a single or double zigzag. Within it no second wave correction, nor wave B of the zigzag, may move beyond the start of the first wave or A wave. This wave count is invalidated with movement below 1,180.84.

The final intermediate wave (E) upwards may not move above the end of intermediate wave (C) for both a contracting and barrier triangle. E waves most commonly end short of the A-C trend line.

All five subwaves of a triangle must divide into corrective structures. If this next upwards movement subdivides as a zigzag which does not make a new high above 1,438.83 then this alternate would be correct.

Triangles take up time and move price sideways. If primary wave 4 unfolds as a triangle then I would expect it to last months rather than weeks.