An inside day completes a doji, as seen on the daily Elliott Wave and Technical Analysis charts.

Summary: The target is now at 1,260.

Classic technical analysis still offers more support for the main wave count than the alternate.

Always use a stop. Invest only 1-5% of equity on any one trade.

New updates to this analysis are in bold.

Last monthly charts and alternate weekly charts are here, video is here.

Grand SuperCycle analysis is here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

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The Magee bear market trend line is added to the weekly charts. This cyan line is drawn from the all time high for Gold on the 6th of September, 2011, to the first major swing high within the following bear market on the 5th of October, 2012. This line should provide strong resistance.

The gold trend line is breached. This reduces the probability of this wave count. Therefore, after further consideration over the last 24 hours, it is my judgement that this main wave count still has a higher probability than the alternate. So today they will be labelled “main” and “alternate” rather than first and second.

At this stage, a triangle still looks possible and has the best fit for cycle wave b. It has some support from declining ATR and MACD now beginning to hover about zero.

Within a triangle, one sub-wave should be a more complicated multiple, which may be primary wave C. This is the most common sub-wave of the triangle to subdivide into a multiple.

Primary wave D of a contracting triangle may not move beyond the end of primary wave B below 1,123.08. Contracting triangles are the most common variety.

Primary wave D of a barrier triangle should end about the same level as primary wave B at 1,123.08, so that the B-D trend line remains essentially flat. This involves some subjectivity; price may move slightly below 1,123.08 and the triangle wave count may remain valid. This is the only Elliott wave rule which is not black and white.

Finally, primary wave E of a contracting or barrier triangle may not move beyond the end of primary wave C above 1,295.65. Primary wave E would most likely fall short of the A-C trend line. But if it does not end there, then it can slightly overshoot that trend line.

Primary wave A lasted 31 weeks, primary wave B lasted 23 weeks, and primary wave C may have been complete in 25 weeks.

Primary wave D should be expected to last at least 8 weeks (but most likely longer). The next Fibonacci ratio in the sequence would be a Fibonacci 13 and then 21.

DAILY CHART

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A common range for triangle sub-waves is from about 0.8 to 0.85 the prior sub-wave, this gives a range for primary wave D from 1,158 to 1,149. At this stage, to try and see the whole of primary wave D complete at Monday’s low does not look right. The B-D trend line would be too steep for a normal looking contracting Elliott wave triangle, and primary wave D would have been far too brief at only 5 weeks duration. For the wave count to have the right look and good proportions (as Gold almost always does), primary wave D should not be labelled over yet.

If primary wave C is correctly labelled as a double zigzag, then primary wave D must be a simple A-B-C structure and would most likely be a zigzag.

It is possible that only intermediate wave (A) was over at the last low and the current bounce is intermediate wave (B).

Within the zigzag of primary wave D, intermediate wave (B) may not move beyond the start of intermediate wave (A) above 1,295.65.

HOURLY CHART

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Upwards movement may be a zigzag for intermediate wave (B). Zigzags subdivide 5-3-5, exactly the same as the start of an impulse.

Now that intermediate wave (B) has moved reasonably above the 0.382 Fibonacci ratio, the next Fibonacci ratio in the sequence at 1,260 will be used.

Minor waves A and B look correct. Minor wave C must be a five wave structure.

Within minor wave C, minute waves i, ii, iii and now iv may all be complete. Minute wave iii exhibits a Fibonacci ratio to minute wave i, so minute wave v may not exhibit a Fibonacci ratio to either of minute waves i or iii.

This wave count expects a few more days of upwards movement towards the target. The channel may then be redrawn as a best fit, probably to look more like the channel on the alternate hourly chart. When that channel is breached by downwards movement, it would offer a strong indication that upwards movement is over and the next wave down is then underway.

ALTERNATE ELLIOTT WAVE COUNT

WEEKLY CHART

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This wave count has been published only in historical analysis. At this stage, it will be published on a daily basis.

There are more than 23 possible corrective structures that B waves may take, and although cycle wave b fits best at this stage as a triangle (main wave count), it may still be another structure. This wave count looks at the possibility that it may be a double zigzag.

If cycle wave b is a double zigzag, then current upwards movement may be part of the second zigzag in the double, labelled primary wave Y.

The biggest problem with this wave count is the structure of intermediate wave (A). This upwards wave looks very much like a three and not a five. This upwards wave must be seen as a five for this wave count to work.

Within the second zigzag of primary wave Y, intermediate wave (B) is a completed regular flat correction. Minor wave C ends just slightly below the end of minor wave A avoiding a truncation. There is no Fibonacci ratio between minor waves A and C.

The target remains the same as previously published for this wave count.

Along the way up, some resistance should be expected at the cyan Magee trend line.

Within intermediate wave (C), no second wave correction may move beyond the start of its first wave below 1,205.41.

DAILY CHART

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Intermediate wave (C) may be unfolding as an impulse. So far minor waves 1 and 2 may be complete. It is common for Gold to exhibit short first waves and very long extended third waves.

When minor wave 3 is complete, then minor wave 4 may not move down into minor wave 1 price territory below 1,225.33.

HOURLY CHART

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A-B-C of a zigzag subdivides 5-3-5. This is exactly the same as 1-2-3 of an impulse. Both wave counts at the hourly chart level may have the same subdivisions.

There is more than one way to label the subdivisions within this upwards movement. This second wave count will look at the possibility that the third wave is extending because that is extremely common.

The target for minor wave 3 is reasonable given that minor wave 1 was very short. This is not an uncommon Fibonacci ratio for Gold, and it fits with the higher target for minor wave 5 to end primary wave Y.

Minute wave iii may only subdivide as an impulse. So far only minuette wave (i) may be complete. Minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,226.81.

If this second wave count is correct, then price should not break below the lower edge of the acceleration channel. If price does that, then the probability of this second wave count would substantially decrease in favour of the first wave count.

Within minuette wave (iii), the correction of subminuette wave ii may not move beyond the start of subminuette wave i below 1,236.39.

TECHNICAL ANALYSIS

WEEKLY CHART

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This chart is updated to now show the breached orange trend line. The prior bearish signal is negated, so the breach is a bullish signal. This supports the second Elliott wave count.

DAILY CHART

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If the main wave count is correct, then current upwards movement is a B wave. B waves should exhibit weakness.

For the short term, the long lower wick on today’s candlestick is bullish.

In support of the main wave count: bearish divergence with price and On Balance Volume, still relatively light volume, declining ATR, and contracting Bollinger Bands.

In support of the more bullish alternate wave count: MACD and the weak bullish signal from On Balance Volume breaking above a resistance line.

On balance, at this stage it is my judgement that the main wave count has more support than the alternate wave count. This would change if the volume profile becomes more bullish, ATR begins to increase, and Bollinger Bands widen with upwards movement.

GDX

DAILY CHART

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Recently, GDX has led Gold. This may happen again here. If it does, then both should be bearish. The rise in GDX is looking weak so far because it lacks volume and range.

The last three red candlesticks complete a Stalled pattern. This is a reversal pattern but not a strong one. This is unchanged after today’s outside day.

This analysis is published @ 08:45 p.m. EST.