8/22/11

The difficulty in figuring out what the wave count actually is would seem to indicate that we are in Minuette (iv) of [v].  On the other hand, the wave count is too torturously "three'd", wave 4 is grossly out of proportion not only with wave 2 but with waves 1 and 3 as well, and the movement since Friday's open has held, more or less, to a parallel channel.

The problem is that it has happened in threes:

  

Overall it is behaving as though it were in a 3-3-3-3-3 diagonal, sloping downward.  This is an ending diagonal (NOT a leading diagonal) and very likely means we are currently in Minuette (v) of Minute [v], on our way headlong perhaps to a double bottom.  The alternative is that it is an ending diagonal comprising Subminuette v of (i) of [v], but I find this unlikely.

The bottom channel line passes through 1101 and 1096 on Wednesday.  Wednesday is also 34 trading days from July 7 which I hold to be the orthodox top of Intermediate (C) and thus Primary [B/2].  It bears watching and could foretell a reversal.  There are also several significant Fibonacci events towards the end of August/beginning of September:  89 trading days since the May 2 price high, as well as 55 calendar days since July 7.  And then there is Pebblewriter's 87 day cycle, which hits the Friday immediately preceding Labor Day weekend.

Another thing that supports a Wednesday end to Minor 1 is that gold is approaching some Intermediate-level Fibonacci resistance levels (see Daneric's recent blog post).  If indeed Minor 1 ends on Wednesday, one of these days would be a logical end either for Minor 2 as a whole or for Minute [a] of 2.

There are some wavers who insist that a double bottom or truncation of Minute [v] is highly unlikely simply on the basis of it being Primary [3].  I disagree; the only thing this really means is that Intermediate (5) almost certainly will not truncate, and Minor 5 of (3) and Minor 5 of (1) probably won't either.  But Minute is three degrees down from Primary; the status of it being a third or C wave of Primary degree probably has little bearing on what Minute [v] must or must not do.