This study is a completion to a previous study " S&P 500 Index Priced in Gold ".
To summarize, S&P 500 index is currently in the corrective wave (( II )) of a deep downtrend impulsive structure, there were two counting possibilities:
( ) An impulsive five waves up labelled 1-2-3-4-5, expected to be part of a 5-3-5 corrective structure.
( ) A corrective three waves up labelled A-B-a-b-C.
Also there was over bought condition on a monthly chart.
From the weekly chart above:
( ) Still the over bought condition is clear as circled on the RSI indicator.
( ) Subwaves labelled 1, 2, and 3 are almost of same time duration, 32 weeks.
( ) Subwave labelled 1 is of length 0.29 ounce of gold.
( ) Subwave labelled 3 is at Fibonacci level 2.618 of wave 1.
( ) Subwave labelled 4 is of duration 7 weeks only, and retraces 37.5% of subwave 3.
( ) Subwave 5 ( not labelled on the chart ) is of age 15 weeks, and length 0.33 ounce of gold.
( ) Subwave 1 is of percentage length 49.15%.
( ) Subwave 5 ( not labelled on the chart ) is of percentage length 28.95%.
( ) So on percentage length basis, subwave 5 forms 58.89% of subwave 1.
( ) Subwave 3 is of percentage length 70.89%.
( ) Also on percentage basis, subwave 3 forms 1.44% of subwave 1.
From the points above, it's clear that this is an impulsive wave structure, with subwave 5 ( not labelled on the chart ) almost completed. It's hard to see this structure as corrective or to labell it A-B-a-b-C, this is not suitable.
Conclusions:
( ) This wave formation - upon completion - should be labelled wave A of (( II )) .
( ) Wave (( II )) has a 5-3-5 wave structure.
( ) Wave A is of length 0.88 ounce of gold.
( ) The coming wave B should be a sideway or a downward correction of three.
( ) Wave B have a first projection at 1.14 ounce of gold ( Fibonacci level 0.38 of wave A ).
( ) Wave B have a second projection at 0.92 ounce of gold ( Fibonacci level 0.62 of wave A ).
( ) Wave B expected to have a duration of about two years.
( ) S&P 500 index may decline from its current level in terms of US dollars, but also the coming gold rally may be weak.
To summarize, S&P 500 index is currently in the corrective wave (( II )) of a deep downtrend impulsive structure, there were two counting possibilities:
( ) An impulsive five waves up labelled 1-2-3-4-5, expected to be part of a 5-3-5 corrective structure.
( ) A corrective three waves up labelled A-B-a-b-C.
Also there was over bought condition on a monthly chart.
From the weekly chart above:
( ) Still the over bought condition is clear as circled on the RSI indicator.
( ) Subwaves labelled 1, 2, and 3 are almost of same time duration, 32 weeks.
( ) Subwave labelled 1 is of length 0.29 ounce of gold.
( ) Subwave labelled 3 is at Fibonacci level 2.618 of wave 1.
( ) Subwave labelled 4 is of duration 7 weeks only, and retraces 37.5% of subwave 3.
( ) Subwave 5 ( not labelled on the chart ) is of age 15 weeks, and length 0.33 ounce of gold.
( ) Subwave 1 is of percentage length 49.15%.
( ) Subwave 5 ( not labelled on the chart ) is of percentage length 28.95%.
( ) So on percentage length basis, subwave 5 forms 58.89% of subwave 1.
( ) Subwave 3 is of percentage length 70.89%.
( ) Also on percentage basis, subwave 3 forms 1.44% of subwave 1.
From the points above, it's clear that this is an impulsive wave structure, with subwave 5 ( not labelled on the chart ) almost completed. It's hard to see this structure as corrective or to labell it A-B-a-b-C, this is not suitable.
Conclusions:
( ) This wave formation - upon completion - should be labelled wave A of (( II )) .
( ) Wave (( II )) has a 5-3-5 wave structure.
( ) Wave A is of length 0.88 ounce of gold.
( ) The coming wave B should be a sideway or a downward correction of three.
( ) Wave B have a first projection at 1.14 ounce of gold ( Fibonacci level 0.38 of wave A ).
( ) Wave B have a second projection at 0.92 ounce of gold ( Fibonacci level 0.62 of wave A ).
( ) Wave B expected to have a duration of about two years.
( ) S&P 500 index may decline from its current level in terms of US dollars, but also the coming gold rally may be weak.