Gold remains within the consolidation zone after another day of essentially sideways movement, which was expected.
Summary: A downwards breakout from this consolidation may now come within the next 24 hours. A new low now below 1,240.17 would indicate price may be breaking out downwards.
A new high above 1,253.82 would indicate a short lived false upwards breakout, before an eventual downwards breakout.
New updates to this analysis are in bold.
Last monthly charts and alternate weekly charts are here, video is here.
Grand SuperCycle analysis is here.
WEEKLY CHART
The Magee bear market trend line is added to the weekly charts. This cyan line is drawn from the all time high for Gold on the 6th of September, 2011, to the first major swing high within the following bear market on the 5th of October, 2012. This line should provide strong resistance.
At this stage, a triangle still looks most likely and has the best fit for cycle wave b.
Within a triangle, one sub-wave should be a more complicated multiple, which may be primary wave C. Primary wave C may not move beyond the end of primary wave A above 1,374.91. This invalidation point is black and white.
At this stage, it looks like primary wave C is now complete at the hourly and daily chart level. However, at the weekly chart level, it looks possible it may continue higher. This possibility must be acknowledged while price remains above 1,214.81. Within intermediate wave (Y), minor wave B may not move beyond the start of minor wave A.
Primary wave D of a contracting triangle may not move beyond the end of primary wave B below 1,123.08. Contracting triangles are the most common variety.
Primary wave D of a barrier triangle should end about the same level as primary wave B at 1,123.08, so that the B-D trend line remains essentially flat. This involves some subjectivity; price may move slightly below 1,123.08 and the triangle wave count may remain valid. This is the only Elliott wave rule which is not black and white.
There are three alternate wave counts that have been published in the last historic analysis, which is linked to above. They are all very bullish. Members may like to review them at this stage. They will only be published on a daily basis if price shows them to be true with a new high now above 1,295.65.
DAILY CHART
Intermediate wave (Y) may now be a complete zigzag if it is accepted that a triangle completed in the position labelled minor wave B. This has a perfect fit on the hourly chart.
A new low below 1,214.81 could not be minor wave B within intermediate wave (Y) and would provide strong confirmation that intermediate wave (Y) is over.
A common range for triangle sub-waves is from about 0.8 to 0.85 the prior sub-wave, this gives a range for primary wave D from 1,158 to 1,149.
If primary wave C is correctly labelled as a double zigzag, then primary wave D must be a simple A-B-C structure and would most likely be a zigzag. Within primary wave D, intermediate wave (B) may not move beyond the start of intermediate wave (A) above 1,295.64.
Intermediate wave (A) lasted only ten days. So far intermediate wave (B) has lasted seven days. If it concludes within one more session, it may total a Fibonacci eight days. This would be a reasonable proportion to intermediate wave (A).
So far it looks like intermediate wave (B) may be completing as an expanded flat correction. It is also possible to move the degree of labelling within this expanded flat down one degree; it may only be minor wave A or W of a more time consuming flat or combination for intermediate wave (B).
The main hourly chart below follows on from the labelling here on the daily chart.
The alternate would see minor wave A complete in the same position but minor wave B incomplete as a triangle.
Primary wave A lasted 31 weeks, primary wave B lasted 23 weeks, and primary wave C may have been complete in 25 weeks.
Primary wave D should be expected to last at least 8 weeks (but most likely longer). The next Fibonacci ratio in the sequence would be a Fibonacci 13 and then 21.
HOURLY CHART
It is looking increasingly likely that intermediate wave (B) is unfolding as a running contracting or running barrier triangle.
Minor wave A is a double zigzag within the triangle. This means that all remaining sub-waves must be simple A-B-C corrections, most likely single zigzags. Minor wave C looks like a three wave zigzag and should be complete.
Minor wave D now also looks complete as a single zigzag. This main wave count now only requires minor wave E upwards to complete. E waves most commonly fall short of the A-C trend line, so expect this as most likely for this triangle. If they don’t fall short, then the other less likely point for E waves to end is with a slight overshoot of the A-C trend line.
Minor wave E may now end quite quickly. It should be expected to end within the next 24 hours, before the next analysis is published.
Triangles normally adhere very well indeed to their trend lines. Here, there are small overshoots of the A-C trend line for part of minor wave D, and this is acceptable, but a breach of either trend line while the triangle is incomplete would not be acceptable. The upper A-C trend line and the lower B-D trend line should offer strong resistance and support while the triangle completes.
Minor wave E may not move beyond the end of minor wave C above 1,253.82.
If this main wave count is invalidated with a new high above 1,253.82, then the alternate below would be used.
ALTERNATE HOURLY CHART
It is very important to always consider alternate ways of labelling a structure that looks like is unfolding as an Elliott wave triangle. Triangles are very tricky structures; it is only clear exactly how they unfolded when they end.
A flat correction may still be unfolding. Within the flat correction, minor wave A is a double zigzag and this is classified as a three; A waves within flats subdivide as threes. Within the flat correction, minor wave B must at its end retrace a minimum 0.9 length of minor wave A, so minor wave B must end at or below 1,243.07.
Within the triangle of minor wave B, minute wave c may now be complete and minute wave d may now be unfolding higher.
For a contracting triangle, minute wave d may not move above the end of minute wave c at 1,253.82; minute wave d may end when price comes up to touch the upper b-d trend line. For a barrier triangle, minute wave d may end about the same level as minute wave b; a barrier triangle will remain valid as long as the b-d trend line remains essentially flat.
Minute wave e may not move beyond the end of minute wave c below 1,240.17.
This alternate still expects some sideways movement for another one to two days followed by a short upwards thrust for minor wave C, which may look like a false upwards breakout.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The long lower wick of the last weekly candlestick is bullish. This puts the short term trend from down to neutral.
Lighter volume for the last week does not support the fall in price. In conjunction with the longer lower wick and doji candlestick, a bounce here looks like a very real possibility.
Declining ATR for a long time fits neatly with the expectation of a large triangle unfolding.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price is range bound again with resistance about 1,260 and support about 1,240. So far, during this small consolidation, it is two downwards days that have strongest volume suggesting a downwards breakout is more likely than upwards. This supports the main hourly Elliott wave count over the alternate.
There is a little distance to go before On Balance Volume may find resistance.
ATR and ADX agree that price is consolidating.
GDX
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The last gap has its lower limit at 22.13. This gap is closed today. It may now offer resistance.
GDX is also consolidating. Resistance is about 22.80 and support is next at 21.5. During the consolidation, it is a day which had a balance of volume downwards that has strongest volume suggesting a downwards breakout is more likely than upwards.
GDX may again be leading the way for Gold. GDX looks like it may be beginning to break down out of the consolidation. Today’s downwards day breaks below support at the last gap at 22.13, on a downwards day that exhibits an increase in volume. This may be a downwards breakout. Look now for resistance about 22.13 to be tested before price moves down and away.
This analysis is published @ 06:48 p.m. EST.
Gold price has offered a very miserly diminishing trading range; very frustrating lol…. Imo unlikely to see Gold price rise past 1245-47 (upside risk 1252-54) and better off playing for a pullback during the week…..
Hi Alan
Any chance you can post an updated Ichimoku chart sometime next week?
Thanks
Patrick, thanks for asking.
I will do the summary of the week as usual once Lara does her Friday report.
Today is a weird day. Gold prices fell but gold miners went up instead.
and so the price point that differentiates the two counts is now 1,237.06.
a new low below that point would be an indication of the next wave down beginning
alternate count updated
one of this triangle subwaves should be a multiple, that may have been minute c
more sideways movement, then a false upwards breakout
main wave count updated
the triangle can now be complete.
but usually when triangles complete the move out of them is fast, this is not fast. that gives me cause for concern. i’m going to look for an alternate.
I agree. I actually like to see a slight overshoot for the E wave followed by a sharp reversal for triangle completions.
anyone feeling this is a bear trap? Or just last gasps of the bull before breakdown
Thats the question. DUST daily candle stick hinting a breakdown next week.
Commercials still covering shorts here in gold and silver. Silver could turn soon. If we get a sharp move down I’m thinking commercials will be going long and this may be a good buying opportunity. There is always the chance the stock market moves down strongly as well And may pull the gold stocks down with them
http://snalaska.com/cot/current/charts/GC.png
cot chart not at levels of previous tops. But cot analysis is tricky
Has the main hourly chart been confirmed?
Yes.
The Alternate Hourly is invalidated with the drop below 1240.17.
b is invalid! I guess the count is still valid or?
am I too bullish ☺
Looks as if GDX is breaking out bullish just as Dreamer’s chart expected. Thank you Dreamer for your input and thoughts on GDX.
Stephen, I wish I could be more bullish on GDX, but today’s action just went up to test the gap that was just filled and is now resistance. Situation is still unclear. A move below 21.75 is more bearish. A move back above the recently filled gap would increase the bullish chance. Good luck.
Ichimoku Gold 4-Hourly Analysis
Data as at 6:30 am ET, June 30
===========================
As long as gold prices trade below the 1260 level, the danger of a push towards the 1240-1230 level, where the brown uptrend support line resides, is real. The bulls have been very much weakened lately, and upward pushes since the last drop towards 1240.17 had not even reached 1250. If the bulls do not pull their act together soon, I’m afraid a bearish market becomes more probable by the minute.
In the 4-Hour Ichimoku Chart, the cloud is red, leaning towards a bearish stance. Prices have managed to enter the cloud but could not make much progress. In the Thursday session, gold prices got rejected by the cloud and moved southwards. They have not recovered ever since. To add insult to injury, prices are trading below both the tenkan-sen and the kijun-sen. If prices fail to trade higher than these two lines, momentum should then build up for an assault on the brown uptrend support line in the 1240-1230 region. Breaking that would lead to a full-fledged bear market.
Gold Technical Analysis
Data as at Market Close, June 29
===========================
Gold markets dropped to a low of 1240.17 pre-market, but recovered from there. Prices traded to a high of 1248.09 after market close, and then dropped all the way. It appears that gold continues to be very volatile and if we can break below the 1240 level, and especially the brown long-term uptrend support line, I think that the market then goes to the 1220 level and then the 1200 level, and possibly below.
Technical analysis remains unchanged. The rise in gold prices had been under pressure from the 50 day MA, as well as having sufficient support from the 200 day MA. Trading between the 50 and 200 MA indicates no strong trend; prices are range bound. Momentum remains negative but it is decelerating and the MACD histogram prints in the red with a slight upward trajectory which reflects consolidation. Also, the 5-day RSI had fallen back after testing the 50 level reflecting negative momentum.
As usual, the market trend for today will be given in a separate Ichimoku post. StockCharts data have not been updated since market close, and so it will not do justice to the intraday picture.
Thanks, Alan!
Great analysis, as always.
Thanks John. The pleasure’s mine.
Glad you like it.
GDX has been weaker than expected. So far, this recent move down has retraced .88 of the previous move up. I’m watching to see if 21.75 holds before updating the wave count.
If 21.75 fails to hold, the next support to watch is 20.79. Below 20.79 and it gets much more bearish. Waiting for a little clarity…
Copper update:
It looks like minor 2 could be done. Look out though for a bit more upwards movement, that green trend line could still be overshot again.
Ideally the yellow support line should be breached before confidence that a high is in.
If taking a punt on the short side here, reduce exposure to 1-2% of equity and be prepared to have an underwater position for a few days.
I’m going to still wait and see what happens for the next few days before I enter here.
Nice setup!
Any suggestions on how to short copper?
You can either buy puts on JJC, or go short COPX. JJC follows %daily changes in copper and has worked well for me in the past.
Spread on JJC options are pretty awful. You have to be really patient to get a decent fill. Much easier to sell shares short if you can borrow them.
Thanks Lara. Much appreciated 🙂