Price moved lower as expected, turning just 3.08 above the second target.
A new low below 1,307.09 has invalidated the alternate Elliott wave count.
Summary: Expect now an upwards swing for a few days. The target is at 1,391, but this may be a little too high.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
Last in-depth historic analysis with monthly and several weekly charts is here, video is here.
There are multiple wave counts at this time at the weekly and monthly chart levels. In order to make this analysis manageable and accessible only two will be published on a daily basis, one bullish and one bearish. This does not mean the other possibilities may not be correct, only that publication of them all each day is too much to digest. At this stage, they do not diverge from the two possibilities below.
BULLISH ELLIOTT WAVE COUNT
FIRST WEEKLY CHART
Click chart to enlarge.
Cycle wave b may be a single zigzag. Zigzags subdivide 5-3-5. Primary wave C must subdivide as a five wave structure and may be either an impulse or an ending diagonal. Overlapping at this stage indicates an ending diagonal.
Within an ending diagonal, all sub-waves must subdivide as zigzags. Intermediate wave (4) must overlap into intermediate wave (1) price territory. This diagonal is expanding: intermediate wave (3) is longer than intermediate wave (1) and intermediate wave (4) is longer than intermediate wave (2). Intermediate wave (5) must be longer than intermediate wave (3), so it must end above 1,398.41 where it would reach equality in length with intermediate wave (3).
Within the final zigzag of intermediate wave (5), minor wave B may not move beyond the start of minor wave A below 1,236.54.
Within intermediate wave (1), the correction labelled minor wave B was over within one week. Within intermediate wave (2), the correction labelled minor wave B was too quick to be seen on the weekly chart. Within intermediate wave (3), the correction labelled minor wave B was over in 12 weeks, one short of a Fibonacci 13. Within intermediate wave (4), the correction labelled minor wave B was over in a Fibonacci 8 weeks. As each actionary wave is extending in time as well as price, the correction of minor wave B within intermediate wave (5) may be longer than that within intermediate wave (3). At this early stage, a Fibonacci 13 or possibly even 21 weeks may be expected. This expectation is a rough guideline; flexibility is essential when B waves unfold.
This first weekly chart sees the upwards wave labelled primary wave A as a five wave structure. It must be acknowledged that this upwards wave looks better as a three than it does as a five. The fifth weekly chart below will consider the possibility that it was a three.
FIRST DAILY CHART
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Within the ending diagonal, intermediate wave (5) must sub-divide as a zigzag.
Minor wave B may be a reasonably time consuming consolidation or a quicker sharper pullback within the upwards trend, and it may end about either of the 0.382 or 0.618 Fibonacci ratios (neither may be favoured). At this stage, it looks more likely that minor wave B may be a more time consuming sideways consolidation.
There are more than 23 possible structures that minor wave B may take, and it is impossible until close to or at the end to have confidence which structure has unfolded. When B waves unfold, it is essential that analysis is flexible. B waves are analogous to either range bound consolidations or sharp corrections. As minor wave B unfolds, the labelling on the hourly chart for its sub-waves will change and alternates will be required.
The yellow arrows outline the possible pathway for an expanded flat for minor wave B. Members are strongly advised that this pathway is only one possible pathway of many. It is chosen to illustrate one of the most common structures for a B wave. This pathway may change as minor wave B continues further. If it does, then the labelling on hourly charts will change.
Minor wave B may still be a triangle or zigzag. All possibilities must still be considered.
Minor wave B may not move beyond the start of minor wave A below 1,236.54.
Within minor wave B, minute wave b must subdivide as a corrective structure. It looks very much like it may be an expanded flat at this stage, which are very common structures. Within minute wave b, minuette wave (b) is now a complete zigzag and is a 1.07 length of minuette wave (a). Minuette wave (c) would now be very likely to make at least a slight new high above the end of minuette wave (a) at 1,361.46 to avoid a truncation and a very rare running flat. The most likely Fibonacci ratio for minuette wave (c) would be 1.618 the length of minuette wave (a).
HOURLY CHART
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A zigzag downwards now looks complete for minuette wave (b).
Minuette wave (c) upwards should be a five wave structure. It may take a few days to unfold.
So far subminuette wave i would be incomplete within minuette wave (c). When subminuette wave ii arrives, it may not move beyond the start of subminuette wave i below 1,303.08.
Minor wave B may still be any one of a flat, triangle, combination or double zigzag. When this correction for minute wave b within it is complete, then alternate hourly wave counts will again be required to consider the different structural possibilities.
BEARISH ELLIOTT WAVE COUNT
FIFTH WEEKLY CHART
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There were five weekly charts published in the last historic analysis. This fifth weekly chart is the most immediately bearish wave count, so this is published as a bearish possibility.
This fifth weekly chart sees cycle wave b as a flat correction, and within it intermediate wave (B) may be a complete triple zigzag. This would indicate a regular flat as intermediate wave (B) is less than 1.05 the length of intermediate wave (A).
If cycle wave b is a flat correction, then within it primary wave B must retrace a minimum 0.9 length of primary wave A at 1,079.13 or below. The most common length of B waves within flats is from 1 to 1.38 times the length of the A wave. The target calculated would see primary wave B end within this range.
I have only seen two triple zigzags before during my 10 years of daily Elliott wave analysis. If this wave count turns out to be correct, this would be the third. The rarity of this structure is identified on the chart.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
At the weekly time frame, ADX now indicates an upwards trend but price is still range bound with resistance about 1,375 and support finally about 1,225.
Strongest weekly volume of recent weeks is an upwards week, which is bullish. The last signal from On Balance Volume is bullish. This supports the main daily Elliott wave count.
A pennant pattern may be forming. If this is a pennant, already 4 weeks in duration, then it should conclude very soon. If it continues, then it would be a triangle which may be either a reversal or continuation pattern.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Looking at the bigger picture, Gold has been within a large consolidation since about January 2017 (this chart does not show all of this large consolidation), and during this consolidation it is two upwards days that have strongest volume and an upwards week that has strongest volume. Volume suggests an upwards breakout may be more likely than downwards.
Currently, Gold is within a smaller consolidation that began in early January 2018. This consolidation is delineated by support about 1,310 to 1,305 and resistance (final) about 1,375. It is an upwards day during this smaller consolidation that has strongest volume, suggesting an upwards breakout may be more likely here than downwards.
Price is currently swinging from resistance to support and back again. Price does not move in a straight line when it is within a consolidation and swings. Consolidations are characterised by very choppy, overlapping movement. Resistance or support may be overshot, only to then see price turn and move back within the zone. An approach to consolidations using classic analysis is normally to wait for a breakout before looking to enter a position. An upwards breakout should have support from volume for confidence. A downwards breakout does not necessarily need support from volume, but it is nice to have it.
ADX usually declines and the +DX and -DX lines may whipsaw during a consolidation.
On Balance Volume may be breaking below support, but this is not yet clear enough for confidence in a bearish signal. If OBV moves lower tomorrow, that would be read as a reasonably bearish signal. If it moves higher, then the support line should be redrawn and it would be read as a weak bullish signal.
With price now slightly overshooting support and Stochastics entering oversold, the end of a downwards swing within the smaller consolidation and the start of an upward swing seems a reasonable expectation here.
GDX WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Support about 20.80 has been tested about seven times and so far has held. The more often a support area is tested and holds, the more technical significance it has.
In the first instance, expect this area to continue to provide support. Only a strong downwards day, closing below support and preferably with some increase in volume, would constitute a downwards breakout from the consolidation that GDX has been in for a year now.
Resistance is about 25.50. Only a strong upwards day, closing above resistance and with support from volume, would constitute an upwards breakout.
On Balance Volume should be watched closely. A breakout there may signal the breakout direction for price.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price has bounced up strongly just above support about 20.85. Today’s candlestick completes a strong bullish engulfing reversal pattern with a bullish long lower wick.
Expect upwards movement for a bounce here. First resistance about 22.00. Next resistance about 23.00.
Published @ 06:15 p.m. EST.
Updated short term picture for the hourly chart:
Price is finding resistance about the upper edge of the orange channel. This may initiate the reaction for a second wave correction.
When the second wave correction which I’m labelling subminuette ii is complete then the power of subminuette iii may be enough to break above resistance and move strongly higher.
The futures chart seems to be in a tight coil ahead of an upside break-out…
yep, that’s exactly what I am going to do. Might take a short scalp down on the c wave of the abc correction before doing so.
The miners gapped open and then closed the gap in a 3 wave corrective structure… anyone buying the dip and going long? It looks like a good trade to the upside.
I am in GDX calls. I thought movement was somewhat sluggish today considering strong action in futures; perhaps due to impending second wave? Let’s hope it’s a quick correction!
What’s wrong with this one
My own personal issue, but I really don’t like sloppily labelled charts. The labels are hovering, they’re not sitting right above or below the ends of the bars where the waves end. This means the analysts intentions can be unclear.
EW as a method has rules which are black and white. So because of that the ends of each wave must be very clear. A rule broken by a pip is an invalid count.
First chart of EURUSD:
Minor 3 (blue) is okay. That fits nicely.
Within minor 4 expanded flat: minute wave c must subdivide as a five wave structure. The labels aren’t on there, but there are lines indicating a triangle. When I look at that piece of movement on a 2 hour chart it will not fit as an Elliott wave triangle. It just won’t meet the rules.
So that’s rather sloppy labelling.
But the count will fit. Minute c can be seen as a complete five wave impulse. There’s just no triangle in there.
The second chart for Gold:
It’s not shown on the chart (it’s off to the left) but trying to see the wave up from December 2016 low to September 2017 high as one complete five wave structure is extremely difficult. That really needs to be clearly resolved before that wave count could be accepted.
Within minor wave 1, the triangle indicated by trend lines for minute wave iv doesn’t really work. I’m looking at it on the one hour chart, and it won’t fit in terms of its trend lines. I don’t think that was a triangle there. You can force it, but the trend lines will not sit on the triangle correctly. Again, sloppy counting and labelling IMO.
Thanks lara