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A small bounce continued as the hourly Elliott wave counts expected. Price remains within the channels.

Summary: Expect downwards movement now to continue at least for the short term. A short term target is at 1,261. This downwards swing may go as low as 1,170 to 1,158.

Use the channels drawn on the hourly charts (they are the same). Expect price to keep falling while it remains within the channel. If that channel is breached by upwards movement, expect a big bounce. The upper edge of the channel may be used to place trailing stops for shorts.

Always trade with stops and invest only 1-5% of equity on any one trade.

New updates to this analysis are in bold.

Last monthly charts for the main wave count are here, another monthly alternate is here, and video is here.

Grand SuperCycle analysis is here.

The wave counts will be labelled first and second. Classic technical analysis will be used to determine which wave count looks to be more likely.

FIRST ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly I 2017
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There are more than 23 possible corrective structures that B waves may take, and although cycle wave b still fits well at this stage as a triangle, it may still be another structure. This wave count looks at the possibility that it may be a double zigzag.

If cycle wave b is a double zigzag, then current upwards movement may be part of the second zigzag in the double, labelled primary wave Y.

The target remains the same.

Within intermediate wave (C), no second wave correction may move beyond the start of its first wave below 1,205.41. However, prior to invalidation, this wave count may be discarded if price breaks below the lower edge of the black Elliott channel. If this wave count is correct, then intermediate wave (C) should not break below the Elliott channel which contains the zigzag of primary wave Y upwards.

There are two problems with this wave count which reduce its probability in terms of Elliott wave:

1. Cycle wave b is a double zigzag, but primary wave X within the double is deep and time consuming. While this is possible, it is much more common for X waves within double zigzags to be brief and shallow.

2. Intermediate wave (B) within the zigzag of primary wave Y is a double flat correction. These are extremely rare, even rarer than running flats. The rarity of this structure must further reduce the probability of this wave count.

DAILY CHART

Gold Elliott Wave Chart Daily 2017
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The analysis will focus on the structure of intermediate wave (C). To see details of all the bull movement for this year see daily charts here.

Intermediate wave (C) must be a five wave structure, either an impulse or an ending diagonal. It is unfolding as the more common impulse.

It is possible that minor wave 1 may have been over at the last high and the current pullback may be minor wave 2. Minor wave 2 may not move beyond the start of minor wave 1 below 1,205.41.

The target for minor wave 2 is at the 0.618 Fibonacci ratio of minor wave 1.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
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Minor wave 2 may be unfolding as a single zigzag, which is one of the most common structures for a second wave.

Zigzags subdivide 5-3-5. So far minute waves a and b look complete. Minute wave c must subdivide as a five wave structure and at this stage looks to be the more common impulse.

This hourly wave count follows on directly from labelling on the daily chart. For this wave count minute waves a, b and now c look to have good proportion at the daily chart level and the Elliott channel has a good fit. Minute wave c is expected to be extending.

So far, within minute wave c, minuette waves (i) and now (ii) look complete.

Minuette wave (iii) should exhibit an increase in downwards momentum; third waves are usually stronger than first waves. Minuette wave (iii) now does exhibit slightly stronger momentum than minuette wave (i). A further increase may be expected if this wave count is correct.

Minuette wave (iii) may only subdivide as an impulse. Subminuette wave i may now be complete. Subminuette wave ii may be a shallow double zigzag that may complete early in Monday’s session. Thereafter, a third wave down at two degrees would be expected by this hourly wave count.

If subminuette wave ii is deep, then it should find very strong resistance at the upper edge of the pink Elliott channel copied over from the daily chart.

Minor wave 1 lasted 44 days in total. So far minor wave 2 has only lasted 10 days. It should be expected to last longer than this for the wave count to have good proportions. A Fibonacci 13 is now a minimum expectation, which would see minor wave 2 end next Wednesday.

Price should remain with the Elliott channel while minor wave 2 continues. If this channel is breached by upwards movement, that shall be an early indicator that minor wave 2 may be over.

If this wave count is correct, then when this pullback is complete then a third wave up should unfold. That may now begin next Wednesday at the earliest.

ALTERNATE HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
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This wave count is identical to the main hourly wave count up to the high labelled minuette wave (ii).

Thereafter, this alternate moves the degree of labelling within minuette wave (iii) all up one degree; it is possible that it is complete.

The probability of this wave count is reduced slightly, which is why it is considered as an alternate, because minuette wave (iii) would be $2 shorter in length than minuette wave (i). Third waves do not have to be longer than first waves, but they most often are. When a third wave is shorter in length than the first wave, this limits the following fifth wave to no longer than equality in length with the first wave, so that the core rule stating a third wave may not be the shortest is met.

Minuette wave (iv) will subdivide so far as a regular contracting triangle. This would provide perfect alternation with the deeper zigzag of minuette wave (ii).

If minuette wave (iv) does not complete as a triangle and morphs into a combination, then it may not move into minuette wave (i) price territory above 1,304.85.

If minuette wave (iv) moves higher, then the limit for minuette wave (v) must also move correspondingly higher. It is limited to no longer than 27.39 in length.

This alternate hourly wave count still has a good look at the daily chart level. It could see minor wave 2 end very early next week, on Monday or Tuesday.

SECOND ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly I 2017
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It is still possible that cycle wave b is unfolding as a regular contracting triangle.

Within a triangle, one sub-wave should be a more complicated multiple, which may be primary wave C. This is the most common sub-wave of the triangle to subdivide into a multiple.

Intermediate wave (Y) now looks like a complete zigzag at the weekly chart level.

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.

Finally, primary wave E of a contracting or barrier triangle may not move beyond the end of primary wave C above 1,295.65. Primary wave E would most likely fall short of the A-C trend line. But if it does not end there, then it can slightly overshoot that trend line.

Primary wave A lasted 31 weeks, primary wave B lasted 23 weeks, and primary wave C lasted 38 weeks.

The A-C trend line now has too weak a slope. At this stage, this is now a problem for this wave count, the upper A-C trend line no longer has such a typical look.

DAILY CHART

Gold Elliott Wave Chart Daily 2017
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This second wave count expects the new wave down may be deeper and longer lasting than the first wave count allows for.

The blue base channel on this second wave count is drawn in exactly the same way as the pink Elliott channel on the first daily chart. For this second wave count the middle of minor wave 3 should have the power to break below support at the lower edge of the base channel. If price does behave like this, it would offer support for this second wave count over the first wave count.

A common length for triangle sub-waves is from 0.8 to 0.85 the length of the prior wave. Primary wave D would reach this range from 1,170 to 1,158.

If primary wave C is correctly labelled as a double zigzag, then primary wave D must be a single zigzag.

HOURLY CHART

Gold Elliott Wave Hourly 2017
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1-2-3 of an unfolding impulse and a-b-c of a zigzag have exactly the same subdivisions: 5-3-5. Subdivisions of downwards movement are seen in the same way for both hourly wave counts.

Minor wave 3 may reach a common Fibonacci ratio to minor wave 1.

Minor wave 3 may only subdivide as an impulse. So far minute waves i and ii look complete. Minute wave iii also may only subdivide as an impulse. Within minute wave iii, minuette wave (i) may now be complete.

It is also possible that while price remains below 1,304.85 minute wave iii may be over at the low labelled minuette wave (i). However, this may have a reasonably low probability because the wave labelled minute wave i is 29.39 in length and the last wave to today’s low is 27.30 in length. Minute wave iii is more likely to be longer than minute wave i, not shorter.

Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,315.81.

Use the 0.382 Fibonacci ratio as a preferred target for minuette wave (ii). At this stage, within a third wave, corrections may begin to be more brief and shallow.

The base channel is exactly the same as the Elliott channel on the first wave count. If this second wave count is correct, then along the way down corrections should find resistance about the upper edge of the base channel.

A third wave should have the power to break below a base channel. If price does break below the lower trend line, that shall offer a little confidence in this wave count.

The target for minor wave 3 is today adjusted. This new target allows for the middle of minor wave 3 to be a stretched out extension.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Weak support here from On Balance Volume may halt the fall in price or initiate a small bounce. If On Balance Volume breaks below the support line next week, that would be a weak bullish signal.

Overall, this chart remains mostly bullish. At this stage, with downwards movement not being well supported by volume, it should be assumed to be a pullback within a larger trend until shown otherwise.

DAILY CHART

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

A small range inside day for Friday has a balance of volume upwards and closes green. Much lighter volume for this session strongly suggests it is another small correction within the short term downwards trend. The longer upper wick on the daily candlestick supports this view. It suggests a red daily candlestick for Monday.

GDX

DAILY CHART

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

For the short term, lighter volume for Friday’s upwards day suggests upwards movement is a counter trend movement. This suggests a red candlestick on Monday.

But support here from On Balance Volume may halt any further fall in price. This support is strong.

If On Balance Volume breaks below support, that should be taken as a strong bearish signal.

Published @ 01:44 a.m. EST on 23rd September, 2017.