Sideways movement again fits the preferred hourly Elliott wave count.
We may now have some confidence about what should happen next.
Sideways movement again fits the preferred hourly Elliott wave count.
We may now have some confidence about what should happen next.
Previous analysis warned of possible swift strong fifth wave extensions to end a third wave.
Last analysis also stated that when price broke below the lower edge of the green channel on the daily chart, then an increase in downwards momentum was expected. That was exactly what happened.
Yesterday’s hourly Elliott wave chart expected an impulse down to end and be followed by another second wave correction to find resistance at the upper edge of a channel.
This is what happened, with the exception of a small fourth wave not moving higher first.
It was expected to be most likely that downwards movement would continue, which is what has happened.
Price moved lower to complete a red candlestick.
Downwards movement was expected for both bull and bear Elliott wave counts, in the short term, but price has moved mostly sideways to complete a small red candlestick.
A new high above 1,191.71 invalidated two hourly Elliott wave counts confirming the prior downwards wave as complete.
More upwards movement was allowed for as part of a fourth wave correction, but it’s more than expected. The third wave moved higher.
More sideways movement with a small inside day fits all four Elliott wave counts at this stage.
Summary: Gold remains in a sideways consolidation phase which began on March 27th. Since price entered the consolidation phase the strongest volume is on down days, indicating that when the breakout comes it may be more likely to be down than up. Volume continues to decline, which often happens towards the end of a consolidation phase. However, the Elliott wave picture remains unclear.
A new high above 1,209.30 would invalidate wave count 1 at this stage.
A new low below 1,184.04 would invalidate wave counts 1, 2 and 3 at this stage. That would leave only wave count 4 as valid.
A new high above 1,224.35 would invalidate wave counts 1 and 4, leaving wave counts 2 and 3 valid.
Click on charts to enlarge.
To see weekly charts for bull and bear wave counts go here. Wave counts 1 and 2 follow the weekly bull count, wave counts 3 and 4 follow the weekly bear count.
Wave Count #1
So far within cycle wave b there is a 5-3 and an incomplete 5 up. This may be intermediate waves (A)-(B)-(C) for a zigzag for primary wave A, or may also be intermediate waves (1)-(2)-(3) for an impulse for primary wave A. Within cycle wave b primary wave A may be either a three or a five wave structure.
Intermediate wave (A) subdivides only as a five. I cannot see a solution where this movement subdivides as a three and meets all Elliott wave rules. This means that intermediate wave (B) may not move beyond the start of intermediate wave (A) below 1,131.09. Intermediate wave (B) is a complete zigzag. Because intermediate wave (A) was a leading diagonal it is likely that intermediate wave (C) will subdivide as an impulse to exhibit structural alternation. If this intermediate wave up is intermediate wave (3) it may only subdivide as an impulse.
At 1,320 intermediate wave (C) would reach equality in length with intermediate wave (A), and would probably end at the upper edge of the maroon channel. At 1,429 intermediate wave (C) or (3) would reach 1.618 the length of intermediate wave (A) or (1). If this target is met it would most likely be by a third wave and primary wave A would most likely be subdividing as a five wave impulse.
Within intermediate wave (C) minor wave 2 is seen as a double combination: zigzag – X – triangle. The triangle for minute wave y would be about only halfway through.
1. Combinations are reasonably common structures.
2. On the daily chart MACD is hovering at zero. This sideways chop of the last 11 days does look like a possible triangle.
3. The upwards wave labelled minute wave x does look like a three on the daily chart.
Within the triangle of minute wave y minuette wave (c) may not move beyond the end of minuette wave (a) below 1,184.04.
If minute wave y is a contracting triangle then minuette wave (d) may not move beyond the end of minuette wave (b) above 1,209.30.
If minute wave y is a barrier triangle then minuette wave (d) should end about the same level as minuette wave (b) at 1,209.30, as long as the (b)-(d) trend line is essentially flat. In practice this means that minuette wave (d) may end slightly above 1,209.30. This is the only Elliott wave rule which is not black and white.
For this wave count 1 I would expect sideways choppy movement for much of this week. The breakout would be expected to be upwards.
Volume continues to decline indicating Gold is still in a consolidation phase which is nearing maturity. If the breakout is upwards is should come with a substantial increase in volume for an up day when it happens.
The hourly charts today will all show movement since the low at 1,184.04.
This first wave count sees movement since 7th April as a regular contracting or regular barrier triangle. Only waves (a) and (b) are complete, and both subdivide best as single zigzags. This means that one of the remaining sub waves should subdivide into a more complicated and time consuming double, or possibly a triangle to complete a nine wave triangle.
The final wave of the triangle for minuette wave (e) would be most likely to undershoot the (a)-(c) trend line, and less likely to overshoot the (a)-(c) trend line.
Upwards movement for the small green candlestick of Wednesday’s session subdivides as an incomplete double zigzag. For wave count 1 this would be subminuette wave b within the zigzag of minuette wave (c) of the triangle.
Within the zigzag of minuette wave (c) subminuette wave b may not move above the start of subminuette wave a at 1,209.30. This invalidation point will be black and white for the next 24 hours.
Minuette wave (c) of a contracting or barrier triangle may not move beyond the end of minuette wave (a) below 1,184.04. This invalidation point will remain black and white while the triangle is completing.
Wave count 1 expects the most sideways movement, and the breakout for this idea may not come until next week.
Wave Count #2
This wave count is identical to wave count #1 up to the high labelled minor wave 1. Thereafter, instead of minor wave 2 continuing it sees minor wave 2 as complete, within minor wave 3 minute waves i and ii complete, and now within minute wave iii minuette waves (i) and (ii) are also complete.
1. Minute wave ii looks like a clear three wave movement now on the daily chart.
2. Minor wave 3 should show its corrections for minute waves ii and iv clearly on the daily chart.
1. Minute wave ii clearly and strongly breaches the lower edge of a base channel drawn about minor waves 1 and 2, one degree higher.
2. Minute wave ii is twice the duration of minor wave 2 one degree higher.
3. The upwards wave of minute wave i looks like a three on the daily chart, but it should be a five.
4. If the middle of a third wave began on Wednesday it should be associated with higher volume, but volume for Wednesday is lower.
Within minute wave iii no second wave correction may move beyond its start below 1,184.04.
Minute wave iii should be beginning to show a strong increase in upwards momentum and an increase in volume. It is not really showing much increase in upwards momentum, and it is showing declining volume. This is an indicator that wave count 2 is likely wrong.
So far within minuette wave (iii) a series of overlapping first and second wave corrections may be complete.
Alternatively, minuette wave (ii) may not be over and could continue sideways as a double flat or double combination. The invalidation point is left at 1,184.04 to reflect this possibility, which could explain the lack of volume.
At 1,304 minute wave iii would reach 1.618 the length of minute wave i.
Minuette wave (ii) may not move beyond the end of minuette wave (i) below 1,184.04.
Wave Count #3
This wave count follows the bear weekly count which sees primary wave 5 within cycle wave a as incomplete. At 957 primary wave 5 would reach equality in length with primary wave 1.
This wave count is today adjusted to see minor wave 2 as an incomplete zigzag, and within minute wave b a close to complete running contracting triangle.
When the triangle is complete then the zigzag for minor wave 2 should end with a small wave up for minute wave c. It should find strong resistance at the upper edge of the maroon channel copied over here from the weekly chart. If this maroon trend line is breached again by a full daily candlestick above it and not touching the maroon trend line then this bear wave count should be discarded.
1. The upwards waves of minuette waves (b) and (d) do look like threes on the daily chart. A triangle nicely explains the sideways chop of the last 18 days.
2. MACD supports the idea of a triangle unfolding as it is hovering at the zero line on the daily chart.
3. Volume supports the idea of a triangle (a typical consolidation phase normally sees declining volume towards its end).
1. Minor wave 2 would be much longer in duration than a minor degree second wave normally is for gold.
The triangle of minute wave b may be almost complete. Thereafter, an upwards breakout for minute wave c would be extremely likely to move price at least slightly above the end of minute wave a at 1,219.99 to avoid a truncation. Minute wave c may be 0.618 the length of minute wave a at 48 in length. It is possible that minute wave c may end above 1,219.99 but below 1,224.35, giving a “false breakout” before a downwards trend begins with strength. Minute wave c does not have to make a new price extreme beyond the running triangle of minute wave b to avoid a truncation, and only needs to move beyond the end of minute wave a.
Minor wave 2 may not move beyond the start of minor wave 1 above 1,308.10.
Within the triangle one of the sub waves is already a more time consuming complicated double, so the final wave of minuette wave (e) is likely to be a simple zigzag.
Within the final zigzag of minuette wave (e) subminuette wave b may not move beyond the start of subminuette wave a above 1,209.30.
Minuette wave (e) may not move beyond the end of minuette wave (c) below 1,184.07.
Minuette wave (e) would be most likely to undershoot the (a)-(c) trend line, but it may also overshoot the (a)-(c) trend line.
This third wave count still expects to see more choppy overlapping sideways movement for another day or so as minuette wave (e) takes its time. The zigzag for minuette wave (e) should be a clear obvious three wave structure. Within it subminuette wave b should find strong resistance at the upper (b)-(d) trend line (green) of the triangle (triangle trend lines normally provide strong support and resistance while a triangle is unfolding).
Subminuette wave b is an almost complete double zigzag. Only one more high is needed to complete the second zigzag in the double.
Thereafter, subminuette wave c downwards should unfold as a five wave structure, and is extremely likely to make at least a slight new low below the end of subminuette wave a at 1,191.48 to avoid a truncation.
Wave Count #4
This wave count is identical to wave count 3 up to the low labelled minor wave 1. Thereafter, it still sees minor wave 2 as a completed zigzag, and minor wave 3 in its very early stages.
Minute wave ii is seen as a completed double combination.
1. The proportion of minute wave ii looks right.
2. Upwards movement continues to find resistance at the upper edge of the blue base channel drawn about minor waves 1 and 2.
3. It is very common for a third wave to begin with a series of overlapping first and second waves.
4. If Tuesday’s session is a small correction within a downwards trend then it should have lower volume.
At 1,059 minor wave 3 would reach equality in length with minor wave 1.
The blue base channel is copied over to the hourly chart. Upwards movement perfectly ends when price touched this trend line. For wave count 4 use this trend line to show where minuette wave (ii) should end. If price gets that high it should again find strong resistance at that blue line.
Minuette wave (ii) for wave count 4 should show up on the daily chart. For Gold, within its extended third waves, the second and fourth wave corrections normally show on the daily chart so that the third wave impulse has a clear five wave look to it. Minuette wave (ii) is an almost complete double zigzag.
When minuette wave (ii) is complete then this wave count expects the middle of a third wave to begin to develop an increase in downwards momentum. A new low below 1,184.04 would now provide a reasonable amount of confidence in this wave count.
If I had to pick a winner it would still be wave count 4. However, it has too many problems for me to have confidence in it. I would wait for price to indicate which count is correct.
This analysis is published about 05:34 p.m. EST.
The main Elliott wave count expected downwards movement. This is not what happened. The small channel was breached on the alternate hourly Elliott wave count, which was the first indicator it was more likely.
Downwards movement for the short term was expected to 1,177. Price moved lower to reach 1,178.59.
Upwards movement was expected, but the target at 1,204 was comfortably exceeded by 15.99.
Summary: I expect a short term correction for the main wave count; minor wave 2 may have begun and the target is at 1,172. This trend change is unconfirmed though, so the channel on the hourly chart must be breached to have confidence in this trend change and the target. The alternate wave count requires strong downwards movement to begin now for a third wave within a third wave. If downwards movement breaks below 1,142.82 the alternate wave count should be seriously considered, and the main wave count would be invalidated at the hourly chart level. A new low below 1,131.09 would provide full invalidation of the main wave count and confirmation of the alternate.
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Main Daily Wave Count
There are more than thirteen possible corrective structures that cycle wave b may take. At this stage it is unclear what degree to label this big movement. I will leave labelling as is at primary degree, but it is equally possible that this degree may be moved down one level and primary wave A is an incomplete zigzag.
Cycle wave b may be a single zigzag as labelled, but may also be a double zigzag with the first zigzag unfolding as labelled. It may be a triangle with only primary wave A zigzag incomplete, or a double combination within a zigzag for primary wave W incomplete. It may be a flat correction with primary wave A as an unfolding zigzag. All these structures are equally likely. Of all Elliott waves, B waves exhibit the greatest variety in form and structure and are the hardest to label correctly as they unfold.
When the big zigzag labelled primary waves A-B-C is complete I will have alternate wave counts to manage the various possibilities for cycle wave b. When the big zigzag is complete that does not mean that cycle wave b must be complete, and only means that if cycle wave b is a single zigzag it would be complete there. All other possibilities will remain open.
A new high above 1,308.10 would invalidate the alternate and confirm this main wave count at primary and cycle degree.
The upwards wave labelled primary wave A fits only as a five wave structure, a leading expanding diagonal. Within a leading diagonal the first, third and fifth waves are most commonly zigzags, and the fourth wave should overlap first wave price territory. I have tried to see this movement as a three; if it is a three then wave A would end at the high labelled intermediate wave (3) within primary wave A. That would see wave A a leading contracting diagonal, but within it the third wave would be longer than the first. This violates the rule for wave lengths of contracting diagonals so that idea is not a viable wave count. This leads me to the conclusion that primary wave A is a five wave structure and cannot be seen as a three.
Because primary wave A subdivides as a five, primary wave B may not move beyond its start below 1,131.09.
At 1,320 primary wave C would reach equality in length with primary wave A. This would complete a 5-3-5 zigzag trending upwards. At that stage alternate wave counts would be required to manage the various possibilities for cycle wave b.
At 1,429 primary wave C would reach 1.618 the length of primary wave A.
Because primary wave A is a diagonal then it is highly likely primary wave C will be an impulse in order to exhibit alternation. Primary wave C may end about the upper edge of the channel drawn about cycle wave b.
This wave count sill has problems of structure within primary wave 5 of cycle wave a:
– within primary wave 5 intermediate wave (2) is a running flat with its C wave looking like a three and not a five.
– within intermediate wave (5) the count is seven which is corrective; either minor wave 3 or 5 will look like a three wave structure on the daily chart where they should be fives.
It is for these reasons that I will retain the alternate until price confirms finally which wave count is correct and which is invalidated.
Minute wave v passed the target and equality in length with minute wave i. It has most likely ended with no Fibonacci ratio to either of minute waves i or iii.
Minute wave v exhibits a short sharp increase in upwards momentum, with an increase in volume on the daily chart for this session. This looks like a fairly typical “blow off”, a fifth wave typical of commodities. I had not expected to see this after a fourth wave triangle, but it is still typical behaviour for Gold.
The fifth wave overshoots the Elliott channel which also looks typical.
MACD shows persistent divergence: while price trends higher MACD trends lower. This supports the idea of a trend change, but it is not definitive.
This trend change is unconfirmed. The channel needs to be breached before confidence may be had in this change. Depending on your risk appetite you may also want to wait for a new low below 1,186.78 before you have confidence in this trend change and the target.
1,186.78 is the end of minute wave iv and the start of minute wave v. When price moves below this point it may not be a second wave correction within minute wave v, and so at that point minute wave v must be over.
Minor wave 1 lasted seven days, one short of a Fibonacci eight. Minor wave 2 would most likely last either two or three days, and at the most it may last a Fibonacci five. It is most likely to be a zigzag or multiple zigzag, and it is most likely to end about the 0.618 Fibonacci ratio at 1,172.
There is no upper invalidation point at the hourly chart level for minor wave 2. It may be a flat or combination, which may include a new high above its start at 1,219.99. Although this is possible it is less likely.
Minor wave 2 should see MACD return to the zero line. It should be a clear corrective structure, a clear “three”.
Minor wave 2 may not move beyond the start of minor wave 1 below 1,142.82. If this invalidation point is breached in the next few trading days, by any amount at any time frame, this wave count would substantially reduce in probability at the daily chart level.
Alternate Daily Wave Count
This alternate 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. Primary wave 5 may last a total Fibonacci 55 weeks. So far it is now in its 36th week.
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.
This wave count still has a better fit in terms of better Fibonacci ratios, better subdivisions and more common structures within primary wave 5, in comparison to the main wave count above.
Within intermediate wave (3) minor wave 1 is a long extension. Within minor wave 1 minute waves iv and ii are grossly disproportionate, with minute wave iv more than 13 times the duration of minute wave i. This also reduces the probability of this wave count.
Although the invalidation point is at 1,308.10, this alternate wave count should be discarded long before that price point is reached. If the maroon channel is breached again by one full daily candlestick above it and not touching it then I would discard this alternate wave count.
A new low below 1,131.09 would confirm that intermediate wave (3) down is underway.
This alternate sees upwards movement as a completed zigzag. Unfortunately, sometimes waves are ambiguous: they are not clearly either threes or fives. With the many subdivisions within this upwards movement it is possible to see it as both a three and a five.
This alternate also expects downwards movement from here. Minor wave 3 should show a clear strong increase in downwards momentum. This is a third wave within a third wave which should gather momentum over the next few days. At 1,055 minor wave 3 would reach equality in length with minor wave 1. This target expects minor waves 1 and 3 to be both extended, so minor wave 5 to end should be shorter.
This wave count also requires confirmation of a trend change in the short term with a breach of the channel about minor wave 2 before any confidence can be had that minor wave 3 has begun.
For this alternate downwards momentum should be strong; MACD should cross well below the zero line. If this wave count is correct then we should see it confirmed within one or two weeks most likely.
While the trend change is unconfirmed it must be allowed for that minor wave 2 could move higher. If it does it may not move beyond the start of minor wave 1 above 1,308.10.
This analysis is published about 03:52 p.m. EST.
I expected another red candlestick for Friday’s session. So far there is a small green candlestick, which may end as a green doji or it may end red. The main hourly Elliott wave count was confirmed, and minuette wave (iv) is an almost complete triangle.
Downwards movement was expected, with a short term upwards correction to end just above 1,210.44 before the downwards trend resumes.