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GOLD Elliott Wave Technical Analysis – 26th September, 2017

Yesterday’s strong upwards movement has been reversed. A new low below 1,296.23 indicated the alternate hourly Elliott wave count should be used.

Summary: The bigger picture reverts to seeing a pullback continue here to about 1,261. It may be as low as 1,170 – 1,158.

However, the very short term picture today is unclear. Although today reversed yesterday’s gains, volume does not support today’s downwards fall in price. It is suspicious.

It is possible that an expanded flat may be unfolding. For the short term, a sideways consolidation may be incomplete.

Watch On Balance Volume carefully for a signal. It will come within a very few days.

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
Click chart to enlarge.

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
Click chart to enlarge.

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 strong reversal today indicates that minor wave 2 is most likely not over and may continue lower to reach a more normal depth of about 0.618 the length of minor wave 1, about 1,261. This would also see minor wave 2 have a better proportion to minor wave 1 in terms of duration; minor wave 1 lasted 44 days and so far minor wave 2 has lasted only 12 days. If it continues now for another 9 days, it may total a Fibonacci 21.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.


This wave count would expect minor wave 2 to now continue for another 9 days, if it exhibits a Fibonacci duration of a total 21 days.

When the first zigzag in a correction has not moved price deep enough, then a second zigzag should be considered. Here, the first zigzag of minute wave w is only a 0.45 length of minor wave 1. Second wave corrections are usually deeper than this.

X waves within double zigzags are commonly brief and shallow. Minute wave x fits this definition here.

If this correction for minor wave 2 is correctly identified as a double zigzag, then minute wave y must subdivide 5-3-5. Within the zigzag of minute wave y, minuette wave (b) may not move beyond the start of minuette wave (a) above 1,313.39. Minuette wave (b) should find very strong resistance about the upper edge of the best fit channel if it gets that high.

Along the way down, to the target at 1,261, there should be another bounce to last one to three days for minuette wave (b). Price is not expected to move in a straight line. It almost never does.

Minuette wave (a) looks to be incomplete.

Note: The labelling on the alternate chart for this downwards movement works in the same way for this main wave count. Minor wave 2 may also be a single zigzag. The low of the 21st of September may be minute wave a. Minute wave b may be continuing sideways as an expanded flat or double zigzag.

This means that the expectation of continuing downwards movement here cannot be relied upon. The lack of support today from volume indicates it may be a B wave.

SECOND ELLIOTT WAVE COUNT

WEEKLY CHART

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

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
Click chart to enlarge.

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
Click chart to enlarge.

This wave count now sees the last wave down differently to the first wave count. This wave count sees a possible five down complete. Subdivisions within it are labelled at the daily chart level.

If the trend is down, then a five down labelled minor wave 1 may be complete. Now a bounce may be unfolding as a three wave structure for minor wave 2.

Minor wave 2 would be too brief and shallow, for this wave count, if it was over at yesterday’s high. That may be only minute wave w of a double zigzag for minor wave 2.

The target for this bounce to end is about 1,330.

While minor wave 2 may be a double zigzag labelled w-x-y, it may also be a flat correction labelled a-b-c. The most common type of flat is an expanded flat where minute wave b would be 1.05 times the length of minute wave a or longer. A new low does not mean that minor wave 2 is over; it would at this stage still most likely be part of minor wave 2.

Expanded flats are very common structures. They can often be identified by weakness within their B waves.

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 thisweek, 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.

Trend lines on On Balance Volume are adjusted today. On Balance Volume should be watched very carefully over the next few days. It must break out of these converging trend lines and when it does that shall offer a weak signal. The signal can only be weak because each line has only been tested twice before and neither are very long held.

A lack of support from volume for downwards movement during Tuesday’s session suggests weakness in downwards movement. This supports the alternate hourly wave count slightly; this is how B waves look.

Long lower wicks on the last two daily candlesticks are bullish. Volume short term is bullish. Stochastics is slightly bullish.

On Balance Volume is neutral. ADX is neutral. RSI is neutral.

ATR is bearish.

Overall, this chart is very mixed. It would be wisest to wait for a signal from On Balance Volume to have more confidence in the next direction for price here.

GDX

DAILY CHART

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

GDX also lacks support from volume today for downwards movement. Short term volume for both markets is slightly bullish.

Both have trend lines on On Balance Volume, which are converging quickly, so a breakout will come soon. It would be wisest also to wait for an On Balance Volume signal for GDX to have confidence in the next direction for price.

Published @ 06:35 p.m. EST.

[Note: Analysis is public today for promotional purposes. Specific trading advice and comments will remain private for members only.]

Continue reading GOLD Elliott Wave Technical Analysis – 26th September, 2017

GOLD Elliott Wave Technical Analysis – 15th September, 2017

Upwards movement was expected after last analysis. Friday completed a higher high and a higher low, but a deep pullback at the end of the session closed the candlestick red. Price remains above the invalidation point on the hourly chart.

Continue reading GOLD Elliott Wave Technical Analysis – 15th September, 2017