Gold has had a trend change. How high this next wave goes and what structure it takes will indicate which Elliott wave count at the monthly chart level may be correct.
A small inside day fits the preferred expectations for Gold, but all Elliott wave counts still remain valid. Targets remain the same.
In the short term, downwards movement was expected to a target at 1,156 – 1,154. Price moved lower to 1,152 before turning up to complete a green daily candlestick.
Upwards movement was expected for Friday’s session.
An inside day closed green.
The main Elliott wave count expected downwards movement and the alternate expected upwards movement.
A new high above 1,283.63 has favoured what was yesterday’s alternate wave count.
Downwards movement was expected for Friday, but this is not what happened.
Upwards movement breached the invalidation point on the main hourly Elliott wave count and was supported by volume.
Upwards movement was expected for Tuesday’s session. This is not what happened.
The hourly wave count was invalidated with a new low below 1,332.74. A multi day pullback has begun a day earlier than expected.
Upwards movement was expected for Friday.
Price moved sideways to complete a small inside day and a green candlestick.
Upwards movement was again expected.
Price has moved sideways to complete an inside day.
Upwards movement was expected from yesterday’s Elliott wave count.
Upwards movement was expected but did not happen.
Price moved lower, remaining above the invalidation point on the hourly Elliott wave count.
A little downwards movement was expected to begin for Monday before a trend change to upwards.
Price has moved lower.
Summary: The trend is up. The target remains at 1,582. Confidence in targets may be had with price movement above 1,349.25. There is still some bearish indication from volume to warrant extreme caution with any long positions at this time. Stops are absolutely essential (as always) and may be set just below 1,310.84. Invest no more than 3% of equity on any long positions entered here. If entering a long position today, the possibility of a loss must be accepted and risk managed.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
Last weekly chart is here.
DAILY ELLIOTT WAVE COUNT
Primary wave 2 is a complete expanded flat correction. Price from the low labelled primary wave 2 has now moved too far upwards to be reasonably considered a continuation of primary wave 2. Primary wave 3 is very likely to have begun and would reach 1.618 the length of primary wave 1 at 1,582.
Primary wave 3 may only subdivide as an impulse.
So far intermediate waves (1) and (2) may be complete within primary wave 3. The middle of primary wave 3 may have begun and may also only subdivide as an impulse.
Within intermediate wave (3), the end of minor wave 1 is moved up to the last high. This fits on the hourly chart although it looks odd here on the daily chart. There was a small fourth wave correction up at the end of minor wave 1 and it subdivides on the hourly chart as an impulse. Minor wave 2 may be a complete zigzag, also subdividing as a zigzag on the hourly chart. If minor wave 2 is over, it would be 0.50 the depth of minute wave i.
No second wave correction may move beyond the start of its first wave below 1,310.84 within minor wave 3.
At 1,437 intermediate wave (3) would reach 1.618 the length of intermediate wave (1). If price keeps going upwards through this first target, or if it gets there and the structure is incomplete, then the next target would be at 1,552 where intermediate wave (3) would reach 2.618 the length of intermediate wave (1).
The support line in cyan is adjusted today. Draw it from the start of intermediate wave (1) to the end of intermediate wave (2). Downwards corrections may bounce upwards from about this support line.
The analysis of minute wave i is adjusted today. The correction which may have ended today may have been minute wave ii. This has a better look on the daily chart, and it fits well on the hourly chart. If this is correct, then there may now be four overlapping first and second waves complete: primary, intermediate, minor and now minute. This wave count expects to see an increase in upwards momentum beginning this week.
HOURLY ELLIOTT WAVE COUNT
If the cyan support line copied over here from the daily chart is working, then minute wave ii should be over today. Minute wave iii upwards should have begun.
At 1,513 minor wave 3 would reach 1.618 the length of minor wave 1.
Within minor wave 3, minute waves i and now ii may be complete. Minute wave ii is a deep 0.66 zigzag, ending close to the cyan support line. At 1,420 minute wave iii would reach 1.618 the length of minute wave i, and at 1,476 minute wave iii would reach 2.618 the length of minute wave i. If minute wave ii moves any lower, then these targets must also move correspondingly lower.
Within minute wave ii, 1,349.25 is the low labelled minuette wave (a). A new high above this point could not be a fourth wave correction within an impulse developing lower. A new high above 1,349.25 would confirm that the downwards wave labelled minute wave ii was a three and was over. At that stage, more confidence may be had in targets and the overall upwards direction expected from this wave count.
The invalidation point will remain at the start of minute wave i while price remains below this confirmation point. If minute wave ii continues lower, it may not move beyond the start of minute wave i below 1,310.84.
THIRD WAVE EXAMPLE – DAILY CHART
In discussing the curved look to Gold’s impulses, particularly for its third waves, here is an example.
Within primary wave 1, the third wave of minor wave 3 had a strong curved look to it. The impulse begins more slowly and has deep and relatively time consuming second wave corrections: Minor wave 2 was 0.68 of minor wave 1, minute wave ii was 0.76 of minute wave i, minuette wave (ii) was 0.56 of minuette wave (i), and subminuette wave ii was 0.64 of subminuette wave i.
The curved look comes from the disproportion between second and fourth wave corrections within the impulse. Here, minute wave ii lasted 4 days and shows clearly on the daily chart yet minute wave iv was over within one day and does not show up with any red candlesticks or doji on the daily chart.
Momentum builds towards the middle of the impulse, continuing to build further during the fifth wave and ending in a blowoff top. This is typical of Gold and all commodities.
This tendency to blowoff tops and curved impulses is particularly prevalent for Gold’s third waves.
The week before last completed a bullish engulfing candlestick pattern supported by stronger volume than the prior downwards week. Last week made a new high, then completed a red candlestick on lighter volume. Overall, the fall in price last week is not supported by volume at the weekly chart level. Last week looks to more likely be a corrective movement than a new trend.
On Balance Volume is still relatively bullish above the purple trend line, which is redrawn at the end of last week. A break below the purple line would be bearish. A break above the green line would be bullish.
RSI is not extreme. There is room for price to rise or fall.
First impression of Friday’s candlestick is a strong downwards day that is well supported by volume. With the fall in price over three days having support from volume, the initial impression is that this movement may be a new downwards trend and not a counter trend movement. Price has closed below the 13 day moving average, which often (not always) provides support or resistance for smaller corrections during Gold’s trends.
Looking back over this bull market that started on 3rd December, 2015, the multi day corrections may assist to see how Friday’s volume spike should be interpreted.
During the upwards trend from 3rd of December, 2015, 14 multi day corrections are noted. Of those 14 multi day corrections, 8 ended with strong volume on the final day and six did not. Gold has a tendency to blowoff tops and volume spikes at the end of downwards waves. It is possible that this is what happened on Friday.
There are two ways to read Friday’s strong volume: as a spike at the end of a movement, which is a bullish interpretation, or as support for downwards movement, which is a bearish interpretation.
Monday completes a small green doji on light volume. The bulls and bears today were very evenly balanced, with the bulls very slightly winning to complete a green candlestick. With light volume for overall a sideways day, the message is unclear but may slightly favour a bearish outlook.
On Balance Volume is bullish while it remains above the purple trend lines. There is some hidden bearish divergence between price and OBV at the last high: OBV made a new high but price did not. This indicates some weakness in price. This weakness may now be resolved by overall four days of downwards movement.
RSI is sitting very close to neutral. There is room for price to rise or fall.
ADX is still declining today indicating no clear trend. ADX has not indicated a trend change: the +DX line remains above the -DX line.
ATR is still overall declining in agreement with ADX. This market is not currently trending, so it should be assumed to be consolidating.
Stochastsics is returning from overbought. If the market is still consolidating, then some more downwards movement would be expected to continue until price finds support about 1,305 – 1,310 and Stochastics is oversold at the same time. This approach works for most swings within a consolidation, except the last, which is when the trend returns.
This analysis is published @ 08:40 p.m. EST.
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A correction was expected to unfold, which is what has happened, but it was expected to be over more quickly though.