Weekly / Daily ES & Gold in Motivewave

The following charts were produced using Motivewave to check for any obvious errors. The first is the weekly ES, showing the waves as originally counted from the low. The current count is of the triple zigzag for the Primary ((B)), or circle-B, wave higher. Note that the original count has no errors in it according to the software. But the question is what comes next? That is a matter of prediction.

ES Futures - Weekly - Primary ((B)) Count

Any reasonably good Elliot analyst will tell you that - because triple zigzags are somewhat rare - then one should remain open to the possibility of the alternate count in which there is a fourth wave at a location where the down wave ends. We have shown this alternate before in the January 20th post at this LINK. We remain open to it, but certain things would need to happen. So far, they haven't. As things stand there are no errors in the TZZ count. Further, the TZZ count is responsible for the correct timing for the largest decline in price since the March 2020 Covid low. If the high is not exceeded, it would be because the Dow does not intend to go beyond the 1.618 exterior retrace of the (C) wave down to the Covid low.

The next chart is the 8-Hr chart of the ES. This count of the potential expanding diagonal also shows no errors at the present time. As we stressed in the comments, by measurement, the Dow (DJIA) has already qualified for the expanding diagonal. The ES and the NQ have not yet. These markets can still do so if the current up wave we are in is the (c) wave of the minute ((b)), circle-b, wave of wave Minor 5. Because in a 3-3-3-3-3 diagonal wave 5 'must be' a zigzag wave, then this count would invalidate if any portion of the minute ((b)) wave travels over wave Minor 4. That's a long way away, but that is how Elliott Wave logic works. On a practical basis more than one close over the declining trend line from wave 2 to wave 4 would be a very serious warning.

ES Futures - 8 Hr - Potential Diagonal

The next chart is of weekly GOLD. For months, I have been suggesting a triangle of some degree might be in progress. That is still possible. The key thing about this week is that price progress has gotten up to very near the 78.6% retrace level. This is what is typically expected in triangles. And the latest move up can be counted as an expanding diagonal five-wave-sequence.

GOLD Futures (GC) - Weekly - Triangle or Impulse?

The weekly candle formed a large tail, so the upward count may be over or nearly over temporarily. Then the question becomes does a 78.6% wave form downward? Does the larger triangle form or does an upward impulse develop? The diagonal would be wave (1) of such an impulse, and any wave that stays above the wave B low might be wave (2) in the potential impulse count we showed in the previous post at this LINK2. This is the typical situation one finds inside of potential triangles or flat waves. Yes, it is messy. It is also difficult to make predictions. That being the case, we'll look at the Daily chart, below.

GOLD Futures (GC) - Daily - Expanding Diagonal

Here is the expanding diagonal shown 5 > 3 > 1, 4 > 2 in both price and time. The structure of the diagonal appears to be 3-3-3-3-3. And if this is the case, then more often such diagonals are 'ending' rather than 'leading'. We'll see. The issue is that IFF the diagonal is ending, then the origin of the diagonal should be exceeded in less time than diagonal took to form. Whereas if the diagonal is leading, then the (C) wave moves to the Aug 2021 B low, and the diagonal becomes (1), up.

Yes, both of these charts are messy.  It is clear we are not dealing with straight-forward impulses (yet).  The diagonals (and/or triangle) reflect the false confidence built up by the Fed's easy money policies, and the confusion created among both bulls and bears as to whether policy will reverse and by how much.

Have an excellent rest of the weekend.

TraderJoe