Yesterday’s analysis expected more downwards movement which is not what happened. Movement above 1,261.92 invalidated the hourly wave counts.

Summary: The hourly wave count which expects more downwards movement for a few days still has the highest probability of the alternates I have considered. The probability that price will move below 1,231.69 is very high. The target for downwards movement to end is now more likely a few days away and remains at 1,198. The invalidation point is at 1,279.66.

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 has provided confirmation that primary wave 4 is not over. This upwards movement cannot be a fourth wave correction within primary wave 5 as it has now moved into what would be its counterpart first wave price territory. The wave down from the high labeled intermediate wave (W) to the low labeled intermediate wave (X) is now confirmed as a three wave structure. Primary wave 5 cannot subdivide as a three, it can only subdivide as a five.

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.

This wave count still has a higher probability than the alternate which I have discarded; it is still more likely that minute wave b is not over and will complete as a very common expanded flat correction.

What I had not expected, and the reason for yesterday’s invalidation, was for the subdivisions within minuette wave (c) to show up as green candlesticks on the daily chart. I had expected a simple straight movement down to the target at 1,198, but this is not what is happening.

Within minute wave b minuette wave (b) is a 153% correction of minuette wave (a). When the B wave within an expanded flat is very long as this one is then the C wave is also relatively long. The target for minuette wave (c) downwards to end remains at 2.618 the length of minuette wave (a) at 1,198.

I would have confidence in this target if price moves below 1,231.69 because at that stage a trend change at 1,231.69 for a new impulse upwards would be invalidated.

Within minuette wave (c) subminuette wave ii is now twice the duration of subminuette wave i, and is 0.610 the length of subminuette wave i, which is an extremely common point for second waves to reach (close to 0.618). It is now even more likely that this second wave correction is over now.

I have redrawn the acceleration channel about subminuette waves i and ii. Upwards corrections should find resistance at the upper edge, and downwards movement should break through support of the lower edge.

At 1,224 subminuette wave iii would reach 1.618 the length of subminuette wave i.

Within minuette wave (c), because its second wave correction is time consuming and shows on the daily chart, it is likely that the upcoming fourth wave will also show as a green candlestick. This C wave looks like it will take longer than previously anticipated, and I would now expect it to take about another week.

If subminuette wave ii continues any higher it may not move beyond the start of subminuette wave i. This wave count is invalidated with movement above 1,279.66.

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.