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A small downwards day remains above the invalidation point on the main hourly Elliott wave count.

So far price continues to find support at the lower edge of the channel.

Summary: The bottom line is still that it must be accepted there is no indication yet of an end to this upwards wave while Gold remains within the channel and above the confidence point of 1,195.82. Targets are now 1,234 or 1,288. If price breaks below the lower edge of the gold channel, then a target for a deep correction would be at or below 1,160. There is more bearishness today from classic technical analysis, so any long positions should be closed if price breaks below the channel. If that happens, then look for a back test of resistance at the trend line for an entry point to go short.

Lara’s Two Golden Rules of Risk Management:

1. Always use a stop.

2. Never invest more than 1-5% of equity on any one trade.

New updates to this analysis are in bold.

Last monthly and weekly charts are here. Last historic analysis video is here.

Grand SuperCycle analysis is here.

MAIN ELLIOTT WAVE COUNT

DAILY CHART

Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

This main wave count has a better fit for prior movement. To see the difference between this main wave count and the alternate below please refer to last historic analysis linked to above.

This main wave count expects Gold has had a primary degree trend change in December 2016. The new upwards wave is either a primary degree third wave, or a primary degree zigzag to complete a double zigzag.

Intermediate wave (1) has so far lasted 30 days. If it continues for another 4, it may complete in a total Fibonacci 34. This would see intermediate wave (1) end on the 30th of January.

So far price remains within the gold channel. A breach of the gold channel on the daily chart would provide strong indication of a trend change.

While price remains within the gold channel, then it must be accepted that it is likely to continue higher. A breach of the gold channel would indicate intermediate wave (1) is over and intermediate wave (2) has arrived.

The first in a series of second wave corrections for Gold’s new impulses is usually very deep. Intermediate wave (2) is expected to be at least 0.618 the depth of intermediate wave (1), and very likely may be deeper. It may not move beyond the start of intermediate wave (1) below 1,123.08.

Intermediate wave (2) may be at least as long in duration as intermediate wave (1), and fairly likely it may be longer. Corrections are often more time consuming than impulses.

Gold often exhibits swift strong fifth waves, but this does not have to happen for minor wave 5. But it is a common tendency, so traders should look out for it.

SIX HOURLY CHART – DETAIL

Gold Elliott Wave Chart 6 Hourly 2017
Click chart to enlarge.

This chart shows detail of all of intermediate wave (1) so far.

Minor wave 1 is seen as a very short first wave, minor wave 2 is a combination, and minor wave 4 exhibits alternation as a zigzag.

There is no Fibonacci ratio between minor waves 3 and 1. This makes it more likely that minor wave 5 will exhibit a Fibonacci ratio to either of minor waves 3 or 1, and most likely a ratio to minor wave 1.

Fibonacci ratios within minor wave 3 are: minute wave iii is 2.02 longer than 6.854 the length of minute wave i, and minute wave v is 1.30 longer than 2.618 the length of minute wave i.

Fibonacci ratios within minute wave iii are: there is no Fibonacci ratio between minuette waves (i) and (iii), and minuette wave (v) is just 0.27 short of 0.382 the length of minuette wave (iii).

Fibonacci ratios within minuette wave (iii) are: subminuette wave iii is just 0.57 longer than 1.618 the length of subminuette wave i, and subminuette wave v has no Fibonacci ratio to either of subminuette waves i or iii.

Fibonacci ratios within subminuette wave iii are: micro wave 3 is just 0.76 longer than 1.618 the length of micro wave 1, and micro wave 5 is 1.81 longer than 0.618 the length of micro wave 3.

Fibonacci ratios within micro wave 3 are: submicro wave (3) is just 0.37 longer than 1.618 the length of submicro wave (1), and submicro wave (5) has no adequate Fibonacci ratio to either of submicro waves (3) or (1).

All Elliott wave rules are met. Minor wave 1 is short and minor wave 3 is a long extension. Minor wave 5 may also be extended. If the target is wrong for this wave count, it may be too low. A higher target may be for minor wave 5 to reach equality in length with minor wave 3 at 1,288.

The channel is a best fit. Draw the first trend line from the ends of minor waves 1 to 3, then pull a parallel copy lower to the end of subminuette wave ii, so that all movement is contained. The bottom line is still that while price remains within this channel we should expect that the upwards trend is intact. Only when that channel is breached should we consider a trend change.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

Each time price comes close to the lower edge of the channel it presents another opportunity to join the trend.

If price comes back down to the lower trend line and moves quickly through it, then the probability of this main hourly wave count would substantially reduce. At that stage, consider the alternate below.

Minor wave 1 was short. Minor wave 3 was extended. It is very common for Gold to exhibit swift strong and extended fifth waves, so that is what the targets will expect.

A first wave up within minor wave 5 may be complete. Minute wave ii may not move beyond the start of minute wave i below 1,195.82.

Along the way up, corrections for this wave count should find support at the lower edge of the channel.

If minor wave 5 is a swift strong movement, then price may break above the upper edge of the channel.

ALTERNATE HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

This wave count is today changed to see intermediate wave (1) over at the last high. This wave count now differs from the main wave count only in the labelling of minor wave 5. Here, it is moved up one degree to see that it may be over.

The first movement of a new trend at intermediate wave degree should begin with a five wave structure at the hourly chart level, in this case a five down.

The first five down may have begun with two overlapping first and second waves. If this is correct, then price should quickly now break below support at the lower trend line. The power of a third wave down should be able to do this easily.

Intermediate wave (1) may have lasted 30 sessions. Intermediate wave (2) should be expected to be about the same duration or slightly longer. A Fibonacci 34 would be the initial expectation. It is most likely to be a zigzag, but it may be any corrective structure except a triangle.

Intermediate wave (2) should be expected to be very deep, at least to the 0.618 Fibonacci ratio about 1,160. It may not move beyond the start of intermediate wave (1) below 1,123.08.

ALTERNATE ELLIOTT WAVE COUNT

DAILY CHART

Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

This alternate wave count expects that Gold is still within a bear market. Targets for new lows can be seen on weekly and monthly charts.

Within the bear market, a primary degree correction is underway.

Primary wave 2 is most likely to subdivide as a zigzag. So far it looks like a five up is either complete now or very close to completion. This may be intermediate wave (A).

Intermediate wave (B) may not move beyond the start of intermediate wave (A) below 1,123.08.

Primary wave 2 may not move beyond the start of primary wave 1 above 1,374.81.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

The first three weeks of upwards movement came with a steady increase in volume to support the rise in price, but last week saw a decline in volume. This indicates some weakness for last week.

The long upper wick and small real body of the last weekly candlestick is slightly bearish. This is not a reversal signal at all but only a warning of internal weakness. This upwards trend will either end or see a correction at the weekly chart level; trend changes are often preceded by signs of weakness.

Price may find some resistance about 1,225.

On Balance Volume gave a weak bullish signal last week. The signal is weak because this line has been broken before. The purple resistance line offers stronger technical significance.

At the weekly chart level, RSI is increasing along with price.

ADX is still declining, indicating the market is not yet trending (but this is a lagging indicator). ADX has not yet indicated a trend change from down to up; the -DX line remains above the +DX line.

DAILY CHART

Gold Daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

Price remains within the channel and is finding resistance about 1,220. A small downwards day comes with a slight decline in volume. The fall in price is not supported by volume today.

However, On Balance Volume is giving another bearish signal today with a move down and away from the yellow line now providing resistance. The breach and back test of this line is bearish. This is not a strong signal (but reasonably bearish) because the line is only tested three times before being breached and has a strong slope.

There is now some divergence between price and RSI at the last high. This is bearish.

There is multiple bearish divergence between price and Stochastics, and Stochastics is overbought.

ADX is still rising but the ADX line is above both directional lines, so this trend is extreme. There is still room for the trend to continue a little further because ADX is not yet above 35.

ATR is flat while price has been moving higher. This is normal for both a counter trend movement and the early stages of a new trend for Gold. It is impossible at this stage to identify which situation this market is in at this time.

Bollinger Bands are beginning to contract. It looks like this trend is tiring. Volatility is declining.

GDX DAILY CHART

GDX Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

A new high today from GDX comes on a decline in volume. The rise in price was not supported by volume. The long upper wick on today’s candlestick is bearish. However, price remains above the blue support line. This line needs to be breached before any confidence may be had that GDX has seen a trend change.

ADX is today increasing, indicating an upwards trend is in place again. It is not extreme yet as the ADX line is below the +DX line.

ATR continues to decline as price moves upwards.

On Balance Volume today remains constrained and gives no signal for GDX. The lower trend line is today adjusted because it did not work as it was drawn in last analysis.

RSI exhibits no divergence with price to indicate any bearishness.

Stochastics does exhibit divergence with price, but this may continue to develop further before price turns.

Bollinger Bands are the most bearish indicator today for GDX with a contraction that may signal a pullback may begin here as volatility reduces.

This analysis is published @ 10:43 p.m. EST.