Category Archives: Public Analysis

Drawing Trend Lines? Simple is Best | 27th June, 2017

One of my favourite Technical Analysis texts is the classic “Technical Analysis of Stock Trends” by Magee. In this book Magee describes how to draw trend lines for bull and bear markets.

Gold Daily 2016
Click chart to enlarge.

To draw a trend line in a bull market find the first two major swing lows, then draw a line across them. Extend the line out to the right. Assume the bull market remains intact while price remains above the line. When the line is properly breached, it is an indicator of a potential trend change from bull to bear.

This technique works on all time frames.

Gold began a series of higher highs and higher lows on the daily chart after the low in December 2016. Within this upwards trend, the first two swing lows are taken as the 27th of January and the 10th of March. This trend line has now been tested eight times, with downwards movement for the last session of the 26th of June being the eighth test.

How Gold behaves at this trend line in the next few days will be a strong indicator. Does the bull run continue or is it over?

This analysis is published @ 03:43 a.m. EST.

On Balance Volume (Beyond Volume Basics) | 23rd June, 2017

Volume alone is not always a clear indicator. It is necessary to add another volume indicator, like On Balance Volume, to add depth to volume analysis and improve accuracy.

Gold Daily 2016
Click chart to enlarge.

On Balance Volume can be used in two ways.

1. When On Balance Volume creates a range draw trend lines across its highs and lows. A breakout by On Balance Volume can sometimes precede a breakout from price, so On Balance Volume can be a leading indicator. Other times On Balance Volume may break out with or after price, it can then be a confirming indicator. Used this way On Balance Volume works very well.

2. Divergence between price and On Balance Volume can be used to indicate weakness and an impending trend change. This divergence can persist for some time prior to a trend change, so it is not useful in picking highs or lows.

Trend lines are drawn on On Balance Volume in the chart above. Resistance is in purple, support in yellow. A long term line is added in pink.

Bullish signals are noted in green arrows on price:

1. Halfway through an upwards trend On Balance Volume breaks above resistance which was prior support. This adds some confirmation to the trend. Traders may have more confidence in long positions.

2. A long term trend line which previously provided support, then resistance, is breached. This adds confidence in the upwards trend continuing.

3. A long term trend line is touched after some time. The bounce up and away is bullish.

4. A breach of resistance is a bullish signal. This illustrates that this technique does not always work. Price continued higher for only one more day before a major reversal.

Bearish signals are noted in red arrows on price:

1. A breach of support is a bearish signal, which should confirm the downwards trend. But a low is found the next day. Again, this technique works more often than it fails, but it can fail.

2. A break of a long term support line halfway through a downwards trend offers confidence in short positions.

3. Another break below a support line offers confidence in the downward trend.

In addition to breaches of trend lines, tests of support and resistance also offer signals.

Using On Balance Volume in conjunction with volume bars adds considerable depth to analysis.

This analysis is published @ 03:41 a.m. EST.

Volume Basics | 21st June, 2017

The activity of buyers is required for price to rise sustainably. This is indicated by increasing volume on upwards days.

The opposite isn’t necessarily true for a falling market. Price can fall due to an absence of buyers, just as it can with increasing activity of sellers. Rising volume with falling price is good to see as it supports the trend, but it is not necessary.

Does Gold’s price and volume conform to this basic principal of technical analysis?

Gold Daily 2016
Click chart to enlarge.

1. This first rise in price is close to textbook perfect. The trend is well supported by volume. Volume does not increase in a straight line each day; some days are lighter than the prior day, but overall there is an increase.

2. This next rise is not so clear, but there is still overall an increase in volume as price rises. Volume is lighter than the prior stronger trend though, so the deep pullback that followed should not have been entirely unexpected.

3. As price falls initially volume declines and then shows some steady increase. The fall in price has support from increasing selling activity.

4 & 5. As price rises volume is not clearly rising. Sometimes the market can drift higher on light volume, so this type of rise is suspicious. The following deep decline again should not have been entirely unexpected.

6 & 7. As price falls volume declines. The market is falling of its own weight.

8. At the end of the fall volume begins to increase.

9. The start of the next rise has some support from volume by day 5. This shows an increase. However, the fifth day volume spike may also be a blow off top signalling an end to the rise temporarily. Blow off tops are not usually the very end; they usually signal a period of consolidation before the trend has a final rise.

The area between 9 and 10 is very unclear, with choppy overlapping price action generally trending higher and mostly flat volume.

10 & 11. As price falls volume declines. The market is mostly falling of its own weight.

When volume clearly supports a trend, then more confidence may be had in it. When volume does not support a trend, it is suspicious. Lack of support from volume will not tell when price will change direction, but it can warn that price may likely change direction and not just consolidate.

This analysis is published @ 03:51 a.m. EST.

Market Correlations – Statements and Assumptions | 20th June, 2017

Occasionally, members and visitors to this website make a statement along the lines of “market X is doing this, so how come you think Gold is going to go up / down?”.

Such statements are based upon unacknowledged assumptions that the markets have a correlation. The problem with assumptions is they can be wrong. So is there a simple mathematical technique to determine if two sets of data are correlated, either positively or negatively?

Gold Daily 2016
Click chart to enlarge.

Yes, there is: by looking at the correlation co-efficient range between two sets of data.

Correlation co-efficient ranges from -1 to +1. A perfect positive correlation will have a correlation co-efficient of +1. A perfect negative correlation will have a correlation co-efficient of -1.

Two sets of data which have a positive correlation will have a correlation co-efficient between +0.5 to +1. Two sets of data which have a negative correlation will have a correlation co-efficient between -0.5 to -1.

Any two sets of data which have a correlation co-efficient between +0.5 and -0.5 are not correlated.

Any two sets of data which have a correlation co-efficient that spends any time between +0.5 and -0.5 does not have a correlation which is reliable. This area of unreliability is shaded in the chart above for several markets which are often assumed to have a correlation to Gold price.

GDX, US Bonds, US Crude Oil, the US dollar index and even Silver do not have a reliable correlation with Gold price. All of these markets have correlation co-efficients which spend time in the shaded areas.

Even if these markets do sometimes exhibit a correlation with Gold, the point is that because this is not always true that when it is so it cannot be assumed to continue. The math shows that it does not.

To base an analysis of Gold on an assumption that another market is moving in a particular direction, and therefore Gold must move in a particular direction, is to base the analysis on assumptions and not data. Such assumptions are unreliable, and why you will not find then in my analyses.

To base an analysis of Gold on actual data and math is more likely to lead to accurate predictions and profitable trading. This does not mean the analysis will always be right, but it does mean the analysis will be based on facts and not assumptions.

This analysis is published @ 04:13 a.m. EST.

Will US Consumer Sentiment Data Release Influence Gold Price?

“The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact.” [1]

US Consumer Sentiment data release will be at 10 a.m. EST on the 16th of June, 2017. The release will be for preliminary June data.

The sentiment data is very likely to affect equities and indices. It may also affect Gold, but any effect should be short term.

A look at an hourly chart with a simple Elliott wave count and Fibonacci retracement levels may yield clues as to what direction Gold may take after the release:

Gold Daily 2016
Click chart to enlarge.

If US Consumer Sentiment data does have an influence on the Gold price, then Gold may see a short sharp upwards thrust to end about either 1,257 or 1,261 followed by very strong downwards movement to new lows. The target at 1,221 is some days away.

To see how the bigger picture supports this view, see my current Elliott wave count.

This analysis is published @ 09:26 p.m. EST.

What Is Gold’s Next Move After US FED Interest Rate Decision on 14th June, 2017?

Technical analysis chart of Gold with Volume and On Balance Volume indicators, and support and resistance lines, may give guidance as to the direction Gold may take after FED Interest rate decision.

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

The recent fall in price over the last three days does not have support from volume and this suggests a bounce should be expected here or very soon. Additionally, there is strong, bullish support for Gold’s price at about 1,260. These support the idea of upwards movement after the FED Interest rate decision.

However, the latest and now most important signal comes from On Balance Volume breaking below support. This is bearish.

Given that a technical analysis approach would expect Gold to move mostly in the direction of least resistance and away from greatest support, the expectation is for Gold to breakout upwards. But because of On Balance Volume’s bearish signal, any upside movement is expected to be relatively short lived.

Also, On Balance Volume supports my current Elliott wave count.

This analysis is published @ 03:30 a.m. EST.

GOLD Elliott Wave Technical Analysis – 31st May, 2017

Downwards movement was expected for Wednesday’s session, but this is not what happened.

Summary: A high may again be in place here or very soon indeed. When the new channel on the hourly chart is breached, then confidence may be had in this view. The target is now at 1,064 for the first weekly chart, and still 1,157 to 1,149 for the second weekly chart.

New updates to this analysis are in bold.

Last historic analysis with monthly charts is here, video is here.

Grand SuperCycle analysis is here.

MAIN ELLIOTT WAVE COUNT

For clarity I have decided at this time it may be best to publish on a daily basis weekly charts I, II and IV. Both weekly charts I and II expect a zigzag down to complete and the difference is in the expected depth. Weekly chart IV has a very low probability and will only be given serious consideration if price makes a new high above 1,294.96.

WEEKLY CHART I

Gold Elliott Wave Chart Weekly I 2017
Click chart to enlarge.

Combinations are very common structures. Cycle degree waves normally last one to several years, and B waves do tend to be more time consuming waves than all other waves. Given these tendencies the most likely scenario at this point may be that cycle wave b is an incomplete double combination.

The first structure in the double labelled primary wave W fits as a zigzag. This upwards movement will subdivide as either a three (zigzag) or a five (impulse). It does have a three wave look to it.

The double is joined by a deep three in the opposite direction labelled primary wave X, which is a 0.77 depth of primary wave W. X waves within double combinations are normally very deep; this one looks right.

The second structure in the combination may be either a triangle or a flat correction. Both of these structures have A waves which subdivide as threes.

At this stage, the upwards wave from the low in December 2016 does now look best and subdivide best as a completed zigzag. This may be intermediate wave (A) of a flat correction or a triangle. Because a triangle for primary wave Y would look essentially the same as the second weekly chart below, only a flat correction is considered here. The most common two structures in a double combination are a zigzag and a flat.

This wave count follows the most common scenario and has the best fit.

Within the flat correction of primary wave Y, intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 1,140.27. The most common length for intermediate wave (B) is from 1 to 1.38 times the length of intermediate wave (A), giving a common range from 1,123.08 to 1,057.77.

A target is now calculated for minor wave C to complete intermediate wave (B). This target would meet the minimum requirement for intermediate wave (B). Minor wave B has moved higher and the target is recalculated. At 1,064 minor wave C would exhibit a common Fibonacci ratio to minor wave A, and the minimum requirement for intermediate wave (B) would be met.

Intermediate wave (B) may subdivide as any corrective structure, but the most common structure for B waves within flats is a zigzag. At this stage, on the hourly chart it looks like a five down labelled minor wave A is complete, which would indicate intermediate wave (B) is a zigzag subdividing 5-3-5.

The daily and hourly charts will follow this weekly chart. That does not mean the other three weekly charts aren’t possible, they are, but the number of charts must be kept reasonable on a daily basis.

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. If that resistance holds, then the second weekly chart would be correct.

WEEKLY CHART II

Gold Elliott Wave Chart Weekly II 2017
Click chart to enlarge.

What if cycle wave b is a triangle? This is also entirely possible. Triangles are not as common as double combinations, but they are not uncommon.

Within the triangle, primary waves A, B and C are all single zigzags. One of the five subwaves of a triangle normally subdivides as a more complicated multiple, usually a double zigzag. This may be what is unfolding for primary wave D. It may also subdivide as a single zigzag.

Primary wave D of a regular contracting triangle may not move beyond the end of primary wave B below 1,123.08.

Primary wave D of a regular barrier triangle should end about the same level as primary wave B at 1,123.08, so that the B-D trend line is essentially flat. What this means in practice is that primary wave D may end slightly below 1,123.08 and the triangle would remain valid. This is the only Elliott wave rule which is not black and white.

Thereafter, primary wave E should unfold upwards and would most likely fall a little short of the A-C trend line. If not ending there, it may overshoot the A-C trend line. Primary wave E may not move beyond the end of primary wave C above 1,294.96.

Triangles normally adhere very well to their trend lines. Occasionally, price may overshoot the trend lines but when this happens it is not by much and is quickly reversed. The upper A-C trend line should offer very strong resistance at this stage if cycle wave b is unfolding as a triangle. This trend line is added to the daily chart below.

At this stage, the structure on the hourly chart is still the same for both this weekly wave count and the first weekly wave count: a zigzag downwards is unfolding. However, they now diverge in how far down the next wave is expected to go. This second weekly wave count expects a more shallow movement to not end reasonably below 1,123.08.

DAILY CHART

Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

This daily chart will suffice for both weekly charts above, although the labelling follows weekly chart I.

Both weekly charts expect a zigzag downwards. (It may also turn out to be a double zigzag. For now a single only will be charted but a double will be kept in mind). Weekly chart I expects a deep zigzag for intermediate wave (B) to a minimum at 1,140.27. Weekly chart II expects a zigzag down for primary wave D to not move below 1,123.08 and most likely fall well short of that point.

The daily chart follows the expectations for weekly chart I, but the structure for weekly chart II would be exactly the same at this stage.

Within the flat correction of primary wave Y, intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 1,140.27. The most likely corrective structures to achieve the deep correction required for B waves within flats are single or multiple zigzags. These begin with a five, then a three in the opposite direction.

Minor wave A is complete. Minor wave B may now be a complete zigzag.

Minor wave B may not move beyond the start of minor wave A above 1,294.96.

MAIN HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

Minute wave b may be a complete double combination. These are very common structures. The most common combination of corrective structures in a double is a zigzag and a flat.

Minute wave c continued higher during Wednesday’s session. Within minute wave c, there is still alternation between minuette waves (ii) and (iv).

The channel about minor wave B is adjusted today to contain all of its movement. When price clearly breaks below the lower edge of this channel, that shall provide some confidence in a possible trend change.

ALTERNATE HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

What if a flat correction is still unfolding for minute wave b and minuette wave (b) within it is still incomplete?

Both waves A and B subdivide as threes within minute wave b, as they must for a flat correction.

There is now a problem within this wave count of the regular flat of minuette wave (b). Higher movement during Wednesday’s session now sees subminuette wave c close to 1.618 the length of subminuette wave a; within regular flats, C waves are normally close to even in length with wave A. This reduces the probability of this alternate a little further today because it no longer has the right look.

This wave count allows for further sideways movement in an ever increasing range.

WEEKLY CHART IV

Gold Elliott Wave Chart Weekly II 2017
Click chart to enlarge.

What if the bull market beginning in December 2015 remains intact? Price has essentially been moving sideways since that date, so all possibilities should be considered.

The Morning Doji Star at the low labelled intermediate wave (B) will not be considered as a reversal pattern here because it comes in what is essentially a sideways movement. It does not come after a downwards wave, so there is nothing to reverse.

This wave count requires confirmation above 1,294.96. That would invalidate the first three weekly charts (the third is seen in historic analysis only).

It is possible that cycle wave b is continuing higher as a double zigzag. However, double zigzags normally have brief and shallow X waves. The purpose of the second zigzag in a double (and the third when there is one) is to deepen the correction when price does not move deep enough in the first (or second) zigzag. Thus double (and triple) zigzags normally have a strong and clear slope against the prior trend. To achieve this look their X waves normally are brief and shallow.

In this case, primary wave X is neither brief nor shallow. It is a 0.77 depth of primary wave W and lasted 0.74 the duration of primary wave W. Overall, this does not have a typical look of a double zigzag so far.

This wave count also must see the rise up to the high labelled intermediate wave (A) as a five wave impulse, not a three wave zigzag. This looks a little forced, so it reduces the probability of this wave count.

This wave count should only be used if confirmed with a new high above 1,294.96. Low probability does not mean no probability, but should always be given less weight until proven.

TECHNICAL ANALYSIS

WEEKLY CHART

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

The decline in volume is bearish, but it does not mean upwards movement must stop here. Price can continue higher on declining volume for another few weeks before a trend change as it did in February of this year.

On Balance Volume remains bullish. The long lower wick on this weekly candlestick is bullish.

ATR is bearish.

Overall, this chart is slightly bullish.

DAILY CHART

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

Wednesday’s session moved price higher but with lighter volume. On Balance Volume is very close to resistance. ADX is just now extreme. Together this looks like a high may be in place here or very soon indeed.

Apart from the upwards day of the 17th of May, which looks like a blowoff top, strongest volume is for downwards days. This is bearish.

GDX

DAILY CHART

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

The weak bearish signal noted yesterday from On Balance Volume was today negated. The yellow support line is redrawn.

A slight increase in volume for today’s outside day, which had a balance of volume upwards, is slightly bullish.

The flag pattern is a continuation pattern and the breakout is expected to be upwards. This is contradicted by the recent volume profile supporting downwards movement over upwards.

On Balance Volume will again be watched carefully. A breakout there may indicate the next direction for price.

This analysis is published @ 11:26 p.m. EST.

[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]

Continue reading GOLD Elliott Wave Technical Analysis – 31st May, 2017

USD Index Elliott Wave Technical Analysis – 23rd May, 2017

The USD Index has been moving lower since January 2017.

ELLIOTT WAVE ANALYSIS

MONTHLY CHART

US Dollar Elliott Wave Chart Monthly 2017
Click chart to enlarge.

A Super Cycle degree impulse looks to be incomplete for Super Cycle wave (I).

Cycle waves I, II and now III look complete within Super Cycle wave (I) impulse. Cycle wave III is just 0.50 longer than 1.618 the length of cycle wave I.

Ratios within cycle wave III are: there is no Fibonacci ratio between primary waves 3 and 1, and primary wave 5 is just 0.5 shorter than equality in length with primary wave 1. Primary wave 3 is the longest extension and has the strongest slope.

Cycle wave II was a deep 0.89 zigzag lasting 26 months. Given the guideline of alternation, cycle wave IV may be expected to be a more shallow sideways correction which would likely be longer lasting. So far it has lasted just four months. It may be in its very early stages still.

WEEKLY CHART

US Dollar Elliott Wave Chart Weekly 2017
Click chart to enlarge.

There is some alternation between the combination of primary wave 2 and the flat of primary wave 4.

When the channel is drawn on the monthly and weekly charts, it shows price has not yet broken below the lower edge.

When the channel is drawn on the daily chart, it shows price has just broken below the lower edge. This is the same for both semi log and arithmetic scales.

With a breach of the channel on the daily chart, it should be assumed to provide some confidence that cycle wave III is over and cycle wave IV has arrived.

DAILY CHART

US Dollar Elliott Wave Chart Daily 2017
Click chart to enlarge.

If cycle wave IV is unfolding as a flat, combination or triangle, then the first move down should unfold as a three. This may be a zigzag for primary wave A of a flat or triangle, or primary wave W of a double combination.

TECHNICAL ANALYSIS

MONTHLY CHART

US Dollar Elliott Wave Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

This analysis supports the Elliott wave count at the monthly chart level.

Divergence between price and RSI is very bearish.

RSI and Stochastics are close to neutral. There is plenty of room for price to fall here.

ADX and ATR agree: the market is not currently trending at the monthly level.

It is very important to note that at the monthly chart level Gold and the USD Index do not have a reliable negative correlation. At this high time frame, they can spend months not correlated.

Each market should be and will be analysed separately. We cannot expect that analysis of one market showing movement expected in one direction means our analysis of the other market should show it to move in the opposite direction, because the math proves that is not the case often enough. To make this correlation assumption without looking at the math is dangerous to your trading account.

DAILY CHART

US Dollar Elliott Wave Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

While price made a new low for the 22nd of May, Stochastics did not. This single day divergence may be followed by a small bounce. RSI is oversold also, suggesting a small bounce here.

MACD is bearish, supporting the trend. Bollinger Bands are widening as price moves lower, so the trend has normal increasing volatility.

Both short and mid term moving averages have a negative slope and the short term average is below the mid term average. The long term 200 day average still has a positive slope, but price is below it.

It is looking increasingly like the USD is within a downwards trend that may continue for some time. This supports the Elliott wave count.

The trend has plenty of room to continue given that ADX is not yet extreme.

At the daily chart level, Gold and the USD Index do not have a reliable negative correlation.

The correlation coefficient must be above 0.5 (a positive correlation) or below -0.5 (a negative correlation) for any two sets of data to have a reliable correlation. Any two sets of data that have a correlation coefficient that spends any time between 0.5 and -0.5 does not mathematically have a reliable correlation. This area is shaded on the chart.

Currently, the correlation coefficient of Gold and the USD Index is -0.43. Currently, they do not have a negative correlation.

It is often assumed that these two markets will move in opposite directions. The math proves that assumption to be false.

This analysis is published @ 12:29 a.m. EST.

GOLD Elliott Wave Technical Analysis – 17th May, 2017

Price remained within channels and continued higher.

Today’s strong upwards session with heavy volume looks like a blowoff top.

Summary: It looks like a blow off top may have ended upwards movement today. However, price remains within the best fit channels. While price remains within the steeper channel particularly, expect it to keep going up. When the channel is breached, it would be likely price has changed trend.

New updates to this analysis are in bold.

Last historic analysis with monthly charts is here, video is here.

Grand SuperCycle analysis is here.

MAIN ELLIOTT WAVE COUNT

For clarity I have decided at this time it may be best to publish on a daily basis weekly charts I and II. Both charts expect a zigzag down to complete and the difference is in the expected depth.

WEEKLY CHART I

Gold Elliott Wave Chart Weekly I 2017
Click chart to enlarge.

Combinations are very common structures. Cycle degree waves normally last one to several years, and B waves do tend to be more time consuming waves than all other waves. Given these tendencies the most likely scenario at this point may be that cycle wave b is an incomplete double combination.

The first structure in the double labelled primary wave W fits as a zigzag. This upwards movement will subdivide as either a three (zigzag) or a five (impulse). It does have a three wave look to it.

The double is joined by a deep three in the opposite direction labelled primary wave X, which is a 0.77 depth of primary wave W. X waves within double combinations are normally very deep; this one looks right.

The second structure in the combination may be either a triangle or a flat correction. Both of these structures have A waves which subdivide as threes.

At this stage, the upwards wave from the low in December 2016 does now look best and subdivide best as a completed zigzag. This may be intermediate wave (A) of a flat correction or a triangle. Because a triangle for primary wave Y would look essentially the same as the second weekly chart below, only a flat correction is considered here. The most common two structures in a double combination are a zigzag and a flat.

This wave count follows the most common scenario and has the best fit.

Within the flat correction of primary wave Y, intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 1,140.27. The most common length for intermediate wave (B) is from 1 to 1.38 times the length of intermediate wave (A), giving a common range from 1,123.08 to 1,057.77.

Intermediate wave (B) may subdivide as any corrective structure, but the most common structure for B waves within flats is a zigzag. At this stage, on the hourly chart it looks like a five down is now complete, which would indicate intermediate wave (B) is a zigzag subdividing 5-3-5.

The daily and hourly charts will follow this weekly chart. That does not mean the other two weekly charts aren’t possible, they are, but the number of charts must be kept reasonable on a daily basis.

WEEKLY CHART II

Gold Elliott Wave Chart Weekly II 2017
Click chart to enlarge.

What if cycle wave b is a triangle? This is also entirely possible. Triangles are not as common as double combinations, but they are not uncommon.

Within the triangle, primary waves A, B and C are all single zigzags. One of the five subwaves of a triangle normally subdivides as a more complicated multiple, usually a double zigzag. This may be what is unfolding for primary wave D.

Primary wave D of a regular contracting triangle may not move beyond the end of primary wave B below 1,123.08.

Primary wave D of a regular barrier triangle should end about the same level as primary wave B at 1,123.08, so that the B-D trend line is essentially flat. What this means in practice is that primary wave D may end slightly below 1,123.08 and the triangle would remain valid. This is the only Elliott wave rule which is not black and white.

Thereafter, primary wave E should unfold upwards and would most likely fall a little short of the A-C trend line. If not ending there, it may overshoot the A-C trend line.

At this stage, the structure on the hourly chart is still the same for both this weekly wave count and the first weekly wave count: a zigzag downwards is unfolding. However, they now diverge in how far down the next wave is expected to go. This second weekly wave count expects a more shallow movement to not end reasonably below 1,123.08.

DAILY CHART

Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

This daily chart will suffice for both weekly charts above, although the labelling follows weekly chart I.

Both weekly charts expect a zigzag downwards. Weekly chart I expects a deep zigzag for intermediate wave (B) to a minimum at 1,140.27. Weekly chart II expects a zigzag down for primary wave D to not move below 1,123.08 and most likely fall well short of that point.

The daily chart follows the expectations for weekly chart I, but the structure for weekly chart II would be exactly the same.

Within the flat correction of primary wave Y, intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 1,140.27. The most likely corrective structures to achieve the deep correction required for B waves within flats are single or multiple zigzags. These begin with a five, then a three in the opposite direction.

Minor wave A is complete today and now minor wave B may also be complete as a quick sharp zigzag. Because of the blowoff top today that looks to be most likely.

However, there can be no confidence yet that minor wave B is over while price remains within both small channels on the hourly chart. Accept that it may continue higher.

Original targets for minor wave B were the 0.382 and 0.618 Fibonacci ratios. Minor wave B today has almost touched the 0.618 Fibonacci ratio, which is at 1,264.34.

If minor wave B continues higher, it may not move beyond the start of minor wave A above 1,294.96.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

Two narrow best fit channels are drawn about this upwards movement. It is very important that members do not have confidence yet that minor wave B is over while price remains within the channels. Only when the first channel is clearly breached may any confidence be had. Reasonable confidence in a trend change may be had if the second channel is breached.

The blow off top seen today may have been minute wave c. C waves can behave like third waves, and third waves often end in blow off tops.

If minor wave B moves higher, then the target calculated for minor wave C must also move correspondingly higher.

If minor wave C lasts a total of 12 sessions, then intermediate wave (B) may last a total Fibonacci 34 sessions.

It is my judgement that this first hourly chart has a higher probability for the following reasons:

– Today’s session completes a blow off top, and this may be followed by a reversal.

– The 0.618 Fibonacci ratio is almost met.

– Price found resistance about 1,260.

ALTERNATE HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

It is also possible that upwards movement for the last six sessions is a complete five wave impulse.

The blow off top may be followed by a consolidation for a B wave within a B wave. This may take a few days.

Thereafter, another upwards wave may make minor wave B very deep indeed, deeper than the 0.618 Fibonacci ratio.

This is possible, but it has a lower probability than the main hourly wave count.

WEEKLY CHART IV

Gold Elliott Wave Chart Weekly II 2017
Click chart to enlarge.

This weekly chart is published today in response to a member’s query.

What if the bull market beginning in December 2015 remains intact? Price has essentially been moving sideways since that date, so all possibilities should be considered.

A possible Morning Doji Star reversal pattern at the low labelled intermediate wave (B) would support this wave count.

This wave count requires confirmation above 1,294.96. That would invalidate the first three weekly charts (the third is seen in historic analysis only).

It is possible that cycle wave b is continuing higher as a double zigzag. However, double zigzags normally have brief and shallow X waves. The purpose of the second zigzag in a double (and the third when there is one) is to deepen the correction when price does not move deep enough in the first (or second) zigzag. Thus double (and triple) zigzags normally have a strong and clear slope against the prior trend. To achieve this look their X waves normally are brief and shallow.

In this case, primary wave X is neither brief nor shallow. It is a 0.77 depth of primary wave W and lasted 0.74 the duration of primary wave W. Overall, this does not have a typical look of a double zigzag so far.

This wave count should only be used if confirmed with a new high above 1,294.96. Low probability does not mean no probability, but should always be given less weight until proven.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Another downwards week closes green with a small real body. This is a spinning top candlestick that shifts the trend from down to neutral.

The balance of volume is upwards and shows a decline. Upwards movement may be a counter trend movement if it does not have support from volume.

The bullish signal from On Balance Volume suggests this week may see upwards movement.

DAILY CHART

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

Today’s session looks very much like a strong blow off top, typical of commodities. Expect either a sideways consolidation for a few days, or a reversal, after a blow off top.

There is slight bearish divergence between price and On Balance Volume to support the view of a reversal here.

There is room for price to rise further; neither RSI nor Stochastics are yet overbought.

If this is a new trend, then it is concerning that Bollinger Bands continue to contract. This trend still lacks expanding volatility.

GDX

DAILY CHART

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

There is no gap between the 15th and 17th of May because the high of the 15th was 23.13 and the low for the 17th was exactly the same.

While this upwards day came with stronger volume, the last four upwards sessions have come with a steady decline in volume. This session looks like it may possibly be a smaller blow off top.

The spinning top candlestick of this session indicates indecision, a balance of bulls and bears.

This upwards movement of the last nine days still has declining ATR, contracting Bollinger Bands, and overall lighter volume than the prior downwards movement. Overall, it still looks more likely to be a counter trend bounce than a new trend for GDX.

With Stochastics now overbought and a spinning top candlestick pattern, members are advised to wait one more day to see if a reversal pattern emerges.

This analysis is published @ 09:40 p.m. EST.

[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]

Continue reading GOLD Elliott Wave Technical Analysis – 17th May, 2017

BTCUSD Elliott Wave Analysis – 11th May, 2017

Bitcoin has recently seen strong upwards movement along with increasing news coverage. A blowoff top may again be approaching. Will this herald just another interruption to Bitcoin’s upwards trend? Or could it be the end of this meteoric rise and the beginning of a larger fall?

All charts are on a semi-log scale.

FORTNIGHTLY CHART

Bitcoin 2 weekly 2017
Click chart to enlarge.

The data for this wave count begins from June 2010.

What looks like a five wave impulse may be completing. With no Fibonacci ratio between cycle waves III and I, it may be more likely that cycle wave V will exhibit a Fibonacci ratio to either of III or I.

This movement does not fit well at all into a channel.

I have taken some time to look at the waves which now in hindsight are obviously complete, particularly the waves within cycle wave III. I have noticed some tendencies of this market:

– Bitcoin behaves like an extreme commodity. Its impulses have a curved look with slower second waves, quick fourth waves, and strong sharp fifth wave extensions. This tendency shows up in bullish and bearish waves.

– Third waves are much longer than first waves, and fifth waves are longer still. Again, this is an extreme version of typical commodity behaviour.

– The middle of its third waves may exhibit Fibonacci ratios within them, but overall it does not regularly exhibit good Fibonacci ratios. This would make target calculation particularly difficult.

– Candlestick reversal patterns are common at the end of Bitcoin’s strong fifth waves. These are engulfing patterns or star patterns with very long wicks on the final candlestick.

– Early second wave corrections are extremely deep, close to 0.8 and often deeper than 0.9 the depth of the prior first wave.

WEEKLY CHART

Bitcoin weekly 2017
Click chart to enlarge.

The weekly chart looks at the possible structure of cycle wave V, the final fifth wave.

There are multiple ways to label this upwards movement. This is only one.

DAILY CHART

Bitcoin daily 2017
Click chart to enlarge.

This daily chart looks at the final fifth wave of primary wave 5. Again, there are multiple ways to label this movement and this is only one of them.

What cannot yet be seen is a candlestick reversal pattern at the high.

A target is calculated at two degrees, which is a zone of only 32 bits. While this target looks reasonable, it must be acknowledged that given observed behaviour of this market it may well be too low if it is wrong.

The bigger picture expects that Bitcoin may soon end its meteoric rise and turn to begin a very sharp and deep fall. When cycle wave V ends, it would complete one impulse up. Given this market’s tendency to very deep early second wave corrections, the resulting fall may be as deep as 0.9 of the prior rise.

I will be following this market daily now to pinpoint when may be best to sell Bitcoins.

Thereafter, I will follow the big second wave correction to its completion in order to pinpoint when will be the best time to buy Bitcoins again.

This analysis is published @ 07:16 p.m. EST.

[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]

Continue reading BTCUSD Elliott Wave Analysis – 11th May, 2017

SILVER Elliott Wave Technical Analysis – 5th May, 2017

Last week’s analysis expected it was fairly likely price may continue to fall at least slightly below 16.82. This is what has happened.

Summary: Assume the trend remains the same until proven otherwise. Draw a channel about downwards movement on an hourly chart to contain it all. Only when that channel is breached expect the downwards wave is over.

New updates to this analysis are in bold.

Last monthly chart is here.

ELLIOTT WAVE COUNT

MONTHLY CHART

Silver weekly 2017
Click chart to enlarge.

A very large zigzag may be unfolding downwards for Super Cycle wave (a).

The first wave down within a zigzag must subdivide as a five. Cycle wave a will fit as a five wave impulse.

Cycle wave b may be any corrective structure. It may not move beyond the start of cycle wave a above 49.752.

The two weekly charts below look at two different structures for cycle wave b.

FIRST WEEKLY CHART

Silver weekly 2017
Click chart to enlarge.

Cycle wave b may be completing as a double combination: zigzag – X – flat. The second structure, a flat correction for primary wave Y, may be underway.

Within a flat correction, intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 15.938. The common range for intermediate wave (B) is from 1 to 1.38 the length of intermediate wave (A).

Intermediate wave (B) may make a new price extreme beyond the start of intermediate wave (A), as in an expanded flat, which are very common structures.

The bigger picture for cycle wave b would expect primary wave Y to end about the same level as primary wave W about 21.062. The purpose of combinations is to take up time and move price sideways. To achieve this purpose the second structure in the double normally ends about the same level as the first.

The maximum number of corrective structures is three within combinations (and double zigzags). This maximum applies to sub-waves W, Y and Z. Within these structures, they may only be labelled as simple A-B-C corrections (or A-B-C-D-E in the case of triangles). They may not themselves be labeled multiples as that would increase the number of corrections within the structure beyond three and violate the rule.

X waves are joining structures and they are not counted in the maximum total of three (otherwise the maximum would be five). X waves may be any corrective structure, including multiples.

FIRST DAILY CHART

Silver daily 2017
Click chart to enlarge.

Intermediate wave (B) may be unfolding as a zigzag. Within Intermediate wave (B), minor wave A looks like an impulse. Minor wave B may not move beyond its start above 18.641.

Now that price has broken below the cyan support line this line may offer resistance. It may force minor wave B to be shallow.

If price breaks back above this line, then it may offer some support again.

SECOND WEEKLY CHART

Silver daily 2017
Click chart to enlarge.

It is also possible that cycle wave b may be completing as a triangle. Only because combinations are more common than triangles is this a second wave count.

Within a triangle, only one of the sub-waves may be a more complicated multiple. Primary wave B subdivides as a double zigzag. Primary waves C, D and E may only be single threes.

Within a contracting or barrier triangle, primary wave C may not move beyond the end of primary wave A above 21.062.

Within a contracting triangle, primary wave D (nor any part of primary wave C) may not move beyond the end of primary wave B below 15.638.

Within a barrier triangle, primary wave D should end about the same point as primary wave B. As long as the B-D trend line remains essentially flat the triangle will remain valid. In practice, this means that primary wave D may move slightly below the end of primary wave B (this is the only Elliott wave rule which is not black and white).

The final wave of primary wave E may not move beyond the end of primary wave C. It would most likely fall short of the A-C trend line.

This second wave count expects a large consolidation to continue for months.

SECOND DAILY CHART

Silver daily 2017
Click chart to enlarge.

Primary wave C may be an incomplete zigzag.

A new high above 18.641 would at this stage invalidate the first wave count and provide some confirmation of this second wave count.

A new low reasonably below 15.638 would see this second wave count invalidated and the first wave count increase in probability.

2 HOURLY CHART

Silver 2 hourly 2017
Click chart to enlarge.

This channel contains almost all downwards movement. The upper edge is the important point. If price breaks above this, then assume the downwards wave is over and a new upwards wave has begun.

This is the simplest and safest approach to this market at this time.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Unless Friday’s session closes with very strong volume, this week may see a decline in volume for another downwards week. This would complete a Three Black Crows candlestick pattern, the opposite of Three White Soldiers. Coming after some increase, this would be a reversal pattern.

There is room for price to continue to fall here. RSI is not yet oversold.

DAILY CHART

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

Volume is bearish. On Balance Volume is very bearish.

ATR is slightly bearish. Bollinger Bands are bearish.

If RSI exhibits divergence with price at lows, then it would be a strong warning of a low in place, at least temporarily.

RSI can remain extreme for long periods of time during a strong bearish trend for Silver (look back at September 2014 for evidence of this statement). While RSI moving well into oversold is a warning, it does not mean that price has to bounce here.

The best evidence of an end to this downwards trend would be a strong candlestick reversal pattern (such as a Bullish Engulfing pattern) or a strong breach of a channel, which may be drawn on an hourly chart about this fall.

This analysis is published @ 04:16 a.m. EST.

[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]

Continue reading SILVER Elliott Wave Technical Analysis – 5th May, 2017