GDX Elliott Wave Technical Analysis – 5th July, 2015

I have the same two Elliott wave counts for GDX. I still favour neither.

GDX does not appear to have sufficient volume for Elliott wave analysis of this market to be reliable. It exhibits truncations readily, and often its threes look like fives while its fives look like threes. I will let my Gold analysis lead GDX, and I will not let GDX determine my Gold analysis for this reason.

Changes to last analysis are bold.

BEAR ELLIOTT WAVE COUNT

GDX monthly alternate 2014
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Price remains within the best fit channel on the monthly chart. A five wave structure down is completing, which may be an A wave within a larger correction.

Minute wave ii may not move beyond the start of minute wave i above 23.22.

At 11.22 intermediate wave (5) would reach equality in length with intermediate wave (1).

At this stage, regular technical analysis strongly favours the bear wave count. A downwards trend is clear and strong.

GDX daily 2014
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Intermediate wave (5) has now three overlapping first and second waves: minor waves 1 and 2, minute waves i and ii, and now also minuette waves (i) and (ii). This indicates strong downwards movement ahead.

At 12.12 minute wave iii would reach 1.618 the length of minute wave i.

Within minuette wave (iii), upwards corrections should find resistance at the upper green trend line. No second wave correction may move beyond the start of its first wave above 19.18.

Downwards momentum has not yet shown an increase beyond that seen for minute wave i, and so it should be expected to increase further in the next few weeks.

BULL ELLIOTT WAVE COUNT

GDX monthly 2014
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The bull wave count expects that the five wave impulse is complete for primary wave A down. Within it, the extended wave is intermediate wave (3). Intermediate wave (3) is 0.11 longer than 2.618 the length of intermediate wave (1), and there is no Fibonacci ratio between intermediate wave (5) and either of (1) or (3).

The channel drawn about primary wave A down is a best fit. The upper edge is still providing resistance. For the bear count (or any variation of it) to be discarded this trend line must be breached. That would provide trend channel confirmation that primary wave A is over and the next wave of primary wave B would then be underway.

Because primary wave A subdivides as a five, primary wave B may not move beyond its start above 64.05.

Primary wave B must subdivide as a corrective structure. At this stage, it looks now like it may be unfolding as a flat correction and within it intermediate wave (A) is a three, a zigzag, and intermediate wave (B) is an incomplete double zigzag.

GDX daily 2014
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If intermediate wave (B) reaches 17.13 or below, then the minimum requirement for it to correct to 90% of intermediate wave (A) for a flat correction would be met. Because the downwards structure within intermediate wave (B) is incomplete, it looks very likely that this minimum would be met.

Intermediate wave (B) is unfolding as a double zigzag. The second zigzag labelled minor wave Y is deepening the correction.

The normal depth for a B wave within a flat correction is between 1 to 1.38 times the A wave. This gives a range for the normal depth of intermediate wave (B) between 16.45 to 11.85.

At 16.17 minute wave c would reach equality in length with minute wave a.

TECHNICAL ANALYSIS

GDX Technical Analysis 2014
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Blue Lines: from the high at 55.25 to the high at 28.03 price moved lower while On Balance Volume moved higher. This negative divergence may indicate a larger fall to come.

Lilac Lines: More recently, as price has made lower highs, OBV has also made lower highs. There is no divergence, so the fall in price is supported by a fall in volume.

Green Lines: Recently price has also made higher lows. Again OBV agrees. There is no divergence.

Price is now breaking below support of its green trend line, as is OBV. This is a further bearish indicator.

GDX Technical Analysis 2014
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ADX now indicates a clear and strengthening downwards trend.

OBV agrees with the fall in price. Price remains below the 34 day EMA. All regular TA indicators point to a strong downwards trend at this time for GDX. The bear wave count is favoured.

GDX Technical Analysis 2014
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This is my own particular method of trend line analysis.

Each series of parallel lines is coded with a different colour. I use this approach to suggest potential areas of support and resistance.

GOLD Elliott Wave Technical Analysis – 2nd July, 2015

A little upwards movement was expected to 1,180 before more downwards movement, but this is not what happened.

At the daily chart level, a new low below 1,162.80 strongly favours the bear Elliott wave count.

Summary: It is increasingly likely that the trend is down. Final confirmation would come with a new low below 1,131.09. In the very short term, a small upwards correction should complete then be followed by more downwards movement.

To see the bigger picture and weekly charts go here.

Changes to last analysis are italicised.

Bear Wave Count

Gold Elliott Wave Chart Daily 2015
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The bear wave count has increased in probability with a new low below 1,162.80. Full confidence may be had in this wave count with a new low below 1,131.09.

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.

Pros:

1. Intermediate wave (1) (to the left of this chart) subdivides perfectly as a five wave impulse with good Fibonacci ratios in price and time. There is perfect alternation and proportion between minor waves 2 and 4. For this piece of movement, the bear wave count has a much better fit than the bull wave count.

2. Intermediate wave (2) (to the left of this chart) is a very common expanded flat correction. This sees minor wave C an ending expanding diagonal which is more common than a leading expanding diagonal.

3. Minor wave B (to the left of this chart) within the expanded flat subdivides perfectly as a zigzag.

4. Volume at the weekly and daily chart continues to favour the bear wave count. Since price entered the sideways movement on 27th March, it is a downwards week which has strongest volume and downwards days which have strongest volume, five of them.

5. On Balance Volume on the weekly chart breached a trend line from back to December 2013. This is another bearish indicator.

Cons:

1. Intermediate wave (2) (to the left of this chart) looks too big on the weekly chart.

2. Intermediate wave (2) (to the left of this chart) has breached the channel from the weekly chart which contains cycle wave a.

3. Within minor wave 1 down, there is gross disproportion between minute waves iv and ii: minute wave iv is more than 13 times the duration of minute wave i, giving this downwards wave a three wave look.

4. Minor wave 2 is much longer in duration than a minor degree correction within an intermediate impulse normally is for Gold. Normally a minor degree second wave within a third wave should last only about 20 days maximum. This one is 44 days long.

Minor waves 1 and 2 are complete. Minute waves i and ii are also complete. Gold may be ready to move to the strongest middle of intermediate wave (3).

Minute wave ii may not move beyond the start of minute wave i above 1,232.49.

Minute wave ii is now very likely to be over here. If it moves any higher, then it should find strong resistance at the blue trend line.

At 1,093 minute wave iii would reach 1.618 the length of minute wave i. If minute wave iii ends in a total Fibonacci twenty one days, then this target may be reached in another eleven days time.

Hourly Bear Wave Count

Gold Elliott Wave Chart Hourly 2015
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Third waves are commonly extended. An extension must begin with a series of overlapping first and second waves. This scenario is very common, so it has the highest probability of the two hourly wave counts.

There may now be a series of six overlapping first and second waves, with micro wave 2 completing.

This sees subminuette wave ii as a very quick expanded flat correction. Within it, micro wave C subdivides perfectly as a five wave impulse (I cannot see this move as a three). This correction looks to be too quick so the alternate below must be considered.

Micro wave 2 may be unfolding as a zigzag. Submicro wave (C) must complete as a five wave structure. Micro wave 2 may not move beyond the start of micro wave 1 above 1,179.17.

Alternate Hourly Bear Wave Count

Gold Elliott Wave Chart Hourly 2015
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I am considering this idea for three reasons:

1. The long lower wick on today’s candlestick along with lower volume is a small bullish indicator. A green candlestick for Friday may resolve this bullishness.

2. It would be most likely for subminuette wave ii to be long lasting enough to show up on the daily chart, giving the impulse for minuette wave (iii) a clear five wave look.

3. The downwards wave labelled micro wave B looks corrective and fits better as a double zigzag than it does as an impulse.

The big problem with this alternate wave count which reduces its probability is the depth of micro wave B at 2.17 times the length of micro wave A. The common depth for a B wave within a flat correction is between 1 to 1.38 times the length of the A wave, and the maximum conventional depth is twice the length of the A wave. Because this is more than twice the depth, the probability of this hourly wave count is low.

However, there is no rule stating the maximum allowed length of a B wave to its A wave within a flat correction. I have seen a few flat corrections where B is more than twice the length of A, such as in this wave count where minuette wave (ii) surprised us with its B wave being 2.9 times the length of its A wave. The subdivisions fit perfectly, and in hindsight minuette wave (ii) did unfold as an expanded flat correction.

If subminuette wave ii is unfolding as a flat correction, then micro wave C would be extremely likely to make at least a slight new high above the end of micro wave A at 1,179.17 to avoid a truncation and a very rare running flat.

At 1,184 micro wave C would reach 2.618 the length of micro wave A. At 1,181 subminuette wave ii would correct to the 0.618 Fibonacci ratio of subminuette wave i.

Subminuette wave ii may not move beyond the start of subminuette wave i above 1,188.16.

Overlapping Waves

Gold Elliott Wave Chart Daily 2015
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This daily chart shows how primary wave 3 began, with a series of overlapping first and second waves. Within intermediate wave (3), it was the fifth wave, minor wave 5, which was the strongest. This is typical of commodities.

The gold arrow is for a “you are here” and points to the equivalent location in primary wave 5 which may now be currently unfolding.

Notice how Gold has strong fifth waves and short quick fourth waves. This often gives its impulses a three wave look, with a slow start and an acceleration towards the end.

Bull Wave Count

Gold Elliott Wave Chart Daily 2015
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The bull wave count sees primary wave 5 and so cycle wave a a complete five wave impulse on the weekly chart.

Pros:

1. The size of the upwards move labelled here intermediate wave (A) (to the left of this chart) looks right for a new bull trend at the weekly chart level.

2. The downwards wave labelled minor wave W looks best as a three.

3. The small breach of the channel about cycle wave a on the weekly chart would be the first indication that cycle wave a is over and cycle wave b has begun.

Cons:

1. Within intermediate wave (3) of primary wave 5 (to the left of this chart), to see this as a five wave impulse requires either gross disproportion and lack of alternation between minor waves 2 and 4 or a very rare running flat which does not subdivide well. I have tried to see a solution for this movement, and no matter what variation I try it always has a problem which substantially reduces its probability.

2. Intermediate wave (5) of primary wave 5 (to the left of this chart) has a count of seven which means either minor wave 3 or 5 looks like a three on the daily chart.

3. Expanding leading diagonals (of which intermediate wave (A) or (1) is) are are not very common (the contracting variety is more common). There is also now a second expanding leading diagonal for minute wave i.

4. Volume does not support this bull wave count.

For volume to clearly support the bull wave count it needs to show an increase beyond 187.34K (30th April) and preferably beyond 230.3K (9th April) for an up day. Only then would volume more clearly indicate a bullish breakout is more likely than a bearish breakout.

Intermediate wave (A) (to the left of this chart) subdivides only as a five. I cannot see a solution where this movement subdivides as a three and meets all Elliott wave rules (with the sole exception of a very rare triple zigzag which does not look right). This means that intermediate wave (B) may not move beyond the start of intermediate wave (A) below 1,131.09. That is why 1,131.09 is final confirmation for the bear wave count at the daily and weekly chart level.

The only option now for the bull wave count is to see intermediate wave (B) or (2) continuing sideways as a double combination. The first structure in the double is a zigzag labelled minor wave W. The double is joined by a brief three in the opposite direction labelled minor wave X, a zigzag. The second structure in the combination is an expanded flat labelled minor wave Y which is incomplete.

Within minor wave Y, minute wave b is a 1.15 times the length of minute wave a indicating an expanded flat. Both minute waves a and b are three wave structures.

Minute wave c downwards must subdivide as a five, and because the first wave within it is an impulse and not a zigzag minute wave c may only be unfolding as an impulse.

Within minute wave c downwards, the third wave is incomplete for minuette wave (iii). At the hourly chart level, this bull wave count sees the subdivisions in exactly the same way as the bear (the bull sees everything one degree lower) so the hourly charts are the same. For this reason I will publish only hourly charts for the bear because they work in exactly the same way for the bull.

There does not look to be enough room for minute wave c to complete as a five wave impulse and remain above the invalidation point at 1,131.09. This is now the biggest problem with the bull wave count.

Technical Analysis

Gold Chart weekly 2015
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Weekly Chart: Overall volume still favours a downwards breakout eventually. During this sideways movement, it is still down days and a down week which have higher volume. On Balance Volume breaches a trend line (lilac line) which began in December 2013, and the breach is significant.

While price has made higher lows, On Balance Volume has made lower lows (green trend lines). This small rise in price is not supported by volume, and it is suspicious. Price is now breaking below support at the green trend line, which is another bearish indicator today.

At the weekly chart level, volume is strongest in a down week. Overall volume is declining, typical of a maturing consolidation. Each series of down weeks includes a week with stronger volume than the following series of up weeks. The breakout should come very soon now and volume indicates a downwards breakout is more likely than upwards.

Gold Chart Daily 2015
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Daily Chart: While ADX still indicates no clear trend yet, price is making new lows. I will no longer illustrate a range bound trading system, because it is too risky to expect an upwards swing from here to be substantial. The sideways consolidation is now so mature the breakout is imminent; the breakout may be beginning now.

A close 3% or more of market value below the lower blue horizontal trend line would confirm a downwards breakout. That price point would be at 1,142.23.

Volume is high for the last three down days, but each day sees volume slightly decline which is a cause for concern. This fall in price is only somewhat supported by volume. The long lower wick on Thursday’s candlestick is a short term bullish indicator. We may see a green candlestick for Friday to resolve this short term bullishness. Look for price to find resistance at the lower blue trend line, which previously provided support.

On Balance Volume at the daily chart level agrees with this fall in price; there is no divergence between the last two lows.

Overall the regular TA picture is more bearish than bullish.

This analysis is published about 06:17 p.m. EST.

SILVER Elliott Wave Technical Analysis – 28th June, 2015

In line with Gold analysis, I have a bull and a bear Elliott wave count for Silver.

Price will tell us which one is correct, but before that happens structure and volume will indicate which is more likely.

Bull Wave Count

Silver weekly 2015
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If cycle wave a is over and Silver, Gold and GDX have all recently seen cycle degree trend changes, then importantly for Silver cycle wave a subdivides as a double zigzag.

A double zigzag is a multiple, and the maximum number of corrective structures in a multiple is three. Any wave count which labels W, Y or Z as W-X-Y within them is invalid. W, Y and Z waves may only be simple corrective structures labelled A-B-C (or A-B-C-D-E in the case of a triangle).

Super Cycle II may not be a multiple and must be a flat correction. Within a flat correction the A wave must be a three, and a double zigzag is classified as a three.

Within a flat correction, cycle wave b must retrace a minimum 90% the length of cycle wave a at 46.279.

Within a flat correction, cycle wave b may make a new all time high above the start of cycle wave a, as in an expanded flat.

The most likely structure for cycle wave b to take price that high is a zigzag.

Silver daily 2015
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If cycle wave b is unfolding as a zigzag, then within it primary wave A should be a five wave structure, either an impulse or a leading diagonal.

At 22.485 intermediate wave (3) would reach 2.618 the length of intermediate wave (1). Intermediate wave (3) may only subdivide as an impulse, and within it minor wave 1 looks like a five on the daily chart. Minor wave 2 should now be over, but if it continues lower it may not move below the start of minor wave 1 below 15.296.

A new high above 18.486 would invalidate the bear wave count and provide confidence in this bull wave count.

Bear Wave Count

Silver weekly 2015
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This bear wave count is identical to the bull wave count up to the end of the triangle for intermediate wave (B) within the second zigzag of primary wave Y.

Thereafter, it looks at the possibility that intermediate wave (C) within the zigzag is not over.

Within intermediate wave (C), minor wave 1 fits as a five better than the bull wave count. Minor wave 2 now though looks to be too large on the weekly and daily chart.

Within minor wave 3, no second wave correction may move beyond the start of its first wave above 18.486.

At 11.52 intermediate wave (C) would reach 0.618 the length of intermediate wave (A). At 5.309 intermediate wave (C) would reach equality in length with intermediate wave (A).

I have drawn a base channel about minor waves 1 and 2. The breach of this base channel is some cause for concern for the bear wave count now.

Silver daily 2015
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Minute wave ii has breached the base channel drawn about minor waves 1 and 2, one degree higher. Base channels often work to show where lower degree corrections find support / resistance, but not always. This wave count remains viable.

Minute wave ii should now be a complete zigzag. The middle of a third wave down may now be underway for Silver, along with Gold.