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Two hourly Elliott wave counts were provided yesterday. The first hourly wave count is now looking more likely.

Summary: The bottom line for the short term is that while price remains within the channels on the hourly charts expect it to continue to fall. Each time price touches the upper edge of the channels represents an opportunity to join the short term downwards trend, but this is only for more aggressive risk tolerant traders.

This trend may end in two days. Look out for the possibility of a selling climax. If that happens, take profits on short positions.

If price breaks above the upper edge of the hourly chart channels (with upwards not sideways movement), exit short positions. The downwards trend may be over or a deep bounce may be underway.

The main wave count expects a deep pullback to a target at 1,197 – 1,192.

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.

Intermediate wave (1) is a complete five wave impulse lasting 39 days. Intermediate wave (2) so far looks like an expanded flat, which are very common structures. The most likely point for it to end would be close to the 0.618 Fibonacci ratio of intermediate wave (1) at 1,197. This is also close to where minor wave C would reach the most common Fibonacci ratio to minor wave A at 1,192, so this target zone has a good probability.

Minor wave C must subdivide as a five wave structure. It would be extremely likely to make at least a slight new low below the end of minor wave A at 1,217.05 to avoid a truncation and a very rare running flat.

So far intermediate wave (2) has lasted 19 sessions. If it exhibits a Fibonacci duration, it may total 21 or 34 sessions and that would see it continue now for a further 2 or 15 sessions.

Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,123.08.

At this stage, there are multiple ways to see the subdivisions of minor wave C downwards at the hourly chart level. Below are just three possibilities. It looks entirely possible for minor wave C to now end in just two more sessions.

If this wave count is correct, then at its end minor wave C will provide a very good opportunity to join the longer term upwards trend.

FIRST HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

Minor wave C must subdivide as a five wave structure, either an impulse or an ending diagonal. At this stage, an ending diagonal does not look likely.

Minute waves i and ii are seen still as complete. Minute wave iii is seen still as incomplete.

Minute wave iii may only subdivide as an impulse. It is common for Gold to exhibit very strong extended fifth waves within its third wave impulses. Look out for minuette wave (v) to be very strong, possibly ending with a selling climax.

There is still weakness to downwards movement with MACD showing weaker momentum, but support from volume today improves the probability of this wave count.

It is my judgement today that this first hourly wave count and the third hourly wave count are the most likely scenarios.

If this wave count is right, then each time the upper edge of the channel is touched represents an opportunity to join the short term downwards trend.

SECOND HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

It is possible that a five wave impulse downwards completed on Friday. This may be minute wave i within the impulse of minor wave C.

Minute wave ii may correct to about the 0.618 Fibonacci ratio at 1,248. Second waves are most commonly deep.

Minute wave ii may be an expanded flat correction. But the support from volume for today’s downwards movement indicates this idea is less likely. B waves should have lighter volume.

If minute wave ii is continuing as an expanded flat, then minuette wave (b) is now a 1.68 length of minuette wave (a). This is reasonably longer than the common length of up to 1.38 but within the allowable convention of up to 2 times the length of minuette wave (a).

This wave count today has less support from classic technical analysis. It is published to illustrate the risk to entering a short position here.

THIRD HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

The first hourly wave count expects an extended fifth wave to complete minute wave iii.

This third hourly wave count expects minute wave iii is the longest extension.

Both scenarios are possible.

The first hourly wave count follows the most common situation for Gold, so it has a slightly higher probability.

It makes no difference at this stage to the final target and almost no difference to the channel.

The bottom line is that while price remains within the channel each time the upper edge is touched represents an opportunity to join the short term downwards trend. If the channel is breached by upwards movement (not sideways), then short positions should be exited.

If price breaks below the lower edge, a selling climax may be building so hold onto short positions. Short positions may then be exited after a day with strong downwards movement and strong volume.

Always use a stop and do not invest more than 1-3% of equity on the short side as this is a counter trend movement.

Alternatively, more patient traders may wait for the bottom to be in before entering long.

TECHNICAL ANALYSIS

WEEKLY CHART

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

The prior four upwards weeks are all green and showed a decline in volume. Now last week is red and shows a strong increase in volume. Last weekly candlestick completes a bearish engulfing candlestick pattern, the most reliable reversal pattern.

This indicates strongly that upwards movement is over for now. Either sideways or downwards movement from here is a reasonable expectation.

On Balance Volume has still not found resistance.

ADX still indicates the market is not yet trending at the weekly time frame.

DAILY CHART

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

Another downwards day closes below prior support about 1,220. Next support is about 1,210.

Volume today supports downwards movement. This supports the first and third hourly wave counts.

ADX is still not below both directional lines, Stochastics is just entering oversold, and RSI is not yet oversold. There is room for downwards movement to continue, so expect it to continue until conditions reach extreme and show divergence.

GDX

DAILY CHART

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

Price has sat on the lower edge of Bollinger Bands for seven days in a row now. A bounce or sideways consolidation here or very soon would be a reasonable expectation to bring price back within Bollinger Bands.

The last three sessions moved price lower on declining volume. The market is falling of its own weight.

Stochastics exhibits multi day divergence now with price, but RSI is not yet oversold.

This downwards trend is nearing extreme, but there is still a little room for price to fall further. Look for next support about 19.95.

This analysis is published @ 05:23 p.m. EST.