Downwards movement ended 1.58 below the first target. A breach of the small channel on the hourly Elliott wave chart indicated a trend change, which was expected.
A small downwards day remains above the invalidation point on the main hourly Elliott wave count.
So far price continues to find support at the lower edge of the channel.
Slightly higher movement from Gold for Friday’s session fits the main Elliott wave count.
Price continues to bounce up off support at the lower trend line.
Downwards movement was expected, which is what happened. Friday’s session made a lower high and a lower low, the definition of downwards movement, although the candlestick closed green.
Resistance will be used to see where price may turn. Fibonacci numbers are used for duration and parallel channels are used for confidence in a turn.
A small downwards day fits the preferred expectations for Gold, but all Elliott wave counts remain valid. Targets remain the same.
A small inside day sees upwards movement. Price remains below the invalidation point.
Upwards movement was expected for the short term, but this is not what happened. Price moved sideways to complete an inside day that closed red.
Summary: Upwards movement is expected for about two or seven days to 1,187, and that may complete a small correction. Thereafter, price may again fall.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
DAILY ELLIOTT WAVE COUNT
Price may be now in a small consolidation for minor wave 4.
The middle of the third wave may be complete for primary wave 1.
This wave count still suffers from a problem of disproportion between minute wave ii and the two prior second wave corrections one and two degrees higher. Minute wave ii should be quicker than minor wave 2 and especially intermediate wave (2). The fact that it is not must reduce the probability of this wave count.
If minor wave 3 is over, then it has no Fibonacci ratio to minor wave 1.
Ratios within minor wave 3 are: minute wave iii has no Fibonacci ratio to minute wave i, and minute wave v is 2.52 short of 0.618 the length of minute wave iii.
Minute wave v fits as a five wave impulse on the hourly chart even though it does not look quite right on the daily chart.
The blue channel here is a best fit. Draw the first trend line from the ends of minor waves 1 to 3, then push a parallel copy up to contain most of this movement except the spike for minute wave ii. Minor wave 4 may find resistance at the upper edge of the channel if it gets that high.
Minor wave 2 was a deep 0.77 zigzag lasting four days. Minor wave 4 may be a more shallow flat, combination or triangle. These tend to be longer lasting structures than zigzags, so at this stage an expectation of a Fibonacci eight or thirteen sessions would be reasonable. So far it has lasted six and is incomplete.
Minor wave 4 may end within the price territory of the fourth wave of one lesser degree. Minute wave iv has its range from 1,211.60 to 1,232.48. This expectation looks now to be too high at this stage. If the target on the hourly chart is breached, then this range may be used.
Minor wave 4 may not move into minor wave 1 price territory above 1,305.32.
The target for intermediate wave (3) is at 1,095 where it would reach 4.236 the length of intermediate wave (1).
HOURLY ELLIOTT WAVE COUNT
Minor wave 4 is least likely to unfold as a zigzag, so it is unlikely at this stage to be over at the high labelled minute wave a.
If minor wave 4 unfolds as the most likely flat, combination or triangle, then within it minute wave a is most likely to be a zigzag. This is complete.
When A waves subdivide as threes, there is no invalidation point for the following B wave because they may make new price extremes beyond the start of the A wave as in expanded flats and running triangles. The most common range for minute wave b would be from 1 to 1.38 the length of minute wave a at 1,158.03 to 1,149.77. Minute wave b is now within this range and is a 1.28 length of minute wave a.
If minor wave 4 unfolds as a flat correction, then within it the minimum requirement for minute wave b is 0.9 the length of minute wave at at 1,155.62. This has been met.
If minor wave 4 unfolds as a triangle, then there is no minimum nor maximum length for minute wave b within it. It must only subdivide as a three. Minor wave 4 may be unfolding as a running triangle.
If minor wave 4 unfolds as a combination, then the first structure within the combination may be a complete zigzag labelled minute wave w. The double combination now would be joined by a three in the opposite direction labelled minute wave x, which now looks complete. The second structure in a possible double combination may now be either a flat or triangle labelled minute wave y. If minute wave y unfolds as an expanded flat, then it may include a new price extreme beyond its start below 1,151.96. If the invalidation point is breached, then a combination would be indicated; but that looks unlikely at this stage though because the upwards movement labelled minuette wave (i) looks like a five and not a three.
It is still impossible to tell at this stage which Elliott wave structure minor wave 4 will complete as, only to say it is least likely to be a zigzag. There are still over 20 possible structures it may be, so it must be understood that as it continues this analysis at the hourly chart level must be flexible and that the labelling of minor wave 4 may still change in coming days.
At this stage, it looks most likely (about 50%) that minor wave 4 is unfolding as an expanded flat correction. Within the expanded flat, minute wave c must continue higher and must subdivide as a five wave structure. At 1,187 minute wave c would reach 1.618 the length of minute wave a. Within minute wave c, minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,151.96.
Minute wave c may last another two days to see minor wave 4 total a Fibonacci eight days. If it cannot complete in just two more days, then it may continue for a further five to total a Fibonacci thirteen.
ALTERNATE DAILY ELLIOTT WAVE COUNT
The larger structure of primary wave X (or primary wave 2) may be either a double zigzag or a double combination. The second structure in this double for primary wave Y may be either a zigzag (for a double zigzag) or a flat or a triangle (for a double combination).
If the next wave up is primary wave 3, then it may only subdivide as an impulse.
It is my judgement at this stage that it is more likely primary wave X will be a double zigzag due to the relatively shallow correction of intermediate wave (X). Although intermediate wave (X) is deep at 0.71 the length of intermediate wave (W), this is comfortably less than the 0.9 minimum requirement for a flat correction. Within combinations the X wave is most often very deep and looks like a B wave within a flat.
However, there is no minimum nor maximum requirement for X waves within combinations, so both a double zigzag and double combination must be understood to be possible. A double zigzag is more likely and that is how this analysis shall proceed.
Within the second zigzag of primary wave X, intermediate wave (Y) is now incomplete at the hourly chart level. At 1,106 minor wave C would reach equality in length with minor wave A.
ALTERNATE HOURLY ELLIOTT WAVE COUNT
There is so much overlapping within the downwards wave labelled minute wave v, it is still not possible to see this as either a complete impulse nor a complete ending diagonal. The conclusion must be that more downwards movement is required to complete the structure if this alternate wave count is correct.
The lack of momentum, the overlapping, and the breach of the channel that was drawn on this hourly chart for last analysis have all further reduced the probability of this wave count, which is still not supported by classic technical analysis.
Subminuette wave iii may now be complete. Subminuette wave iv may not move into subminuette wave i price territory above 1,169.47.
The target remains the same. At 1,106 minor wave C would reach equality in length with minor wave A.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price is falling as volume is declining. The fall in price is not supported by volume. Price is falling of its own weight, and it can continue to do this for some time. But for a healthy sustainable trend volume should be supporting the movement and that is not the case here.
There is no support line here or close by for On Balance Volume.
RSI is not yet extreme. There is still a little room for price to fall further.
Click chart to enlarge. Chart courtesy of StockCharts.com.
A small inside day moved price overall lower to close red, and this does not have support from volume as it declined. Volume is declining as price moves slowly lower over the last several days.
On Balance Volume has provided resistance today. A break above the purple resistance line would be a reasonable bullish signal.
RSI is extreme and there is triple bullish divergence with price at recent lows. This supports the main Elliott wave count over the alternate, fairly strongly, and it is difficult to see how price could fall strongly lower from here. If price does make new lows, it is unlikely to be by much or for long at this point.
ADX still indicates a downwards trend is in place. ATR still disagrees as it is declining. Bollinger Bands are contracting. This trend looks tired and weak. It would be very reasonable to expect either some consolidation for a week or so, or a trend change about here.
Stochastics also is extreme and exhibits divergence with price.
The larger trend may be now down as the 200 day moving average has rolled over and is now pointing down. This also supports the main Elliott wave count.
Both the mid and short term averages are pointing down and price is below all three. The trend is down.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price is moving essentially sideways and is range bound for GDX. Resistance is about 22.25 and support is about 20.15. During this range bound period, it is the downwards day of the 23rd of November that has strongest volume (ignoring the first day of the 14th of November) suggesting a downwards breakout may be more likely than upwards. This technique often works for Gold (not always). It remains to be seen how reliable it is for GDX.
Monday’s downwards session comes with a decline in volume, so the fall in price is not supported. Now Tuesday’s upwards session comes with a small increase in volume offering some small support for a rise in price.
ADX today has slightly increased again indicating a possible downwards trend still. ATR is clearly declining. Bollinger Bands are clearly contracting. Price is consolidating. This market is not currently trending. A bear flag pattern may be forming, delineated by blue trend lines. This is a continuation pattern. It is supported by declining volume.
Using the measure rule, a target of about 14.50 would be expected. First, to have confidence in this target, a downwards breakout needs to be seen below the lower blue trend line. If this is accompanied by a spike in volume, it would be given more weight. But note that for a downwards breakout stronger volume is not always necessary as the market may fall of its own weight.
On Balance Volume today may be breaking upwards above resistance at the purple trend line. This in conjunction with some small increase in volume for the session is a bullish indicator. Price may break out of the pattern upwards. This signal contradicts the implications of the flag pattern, which expects a downwards breakout.
Looking at how GDX has behaved with On Balance Volume trend lines recently (blue lines on OBV), it is noted that on the 27th of September a downwards breakout correctly predicted the next direction for price four and five days later, and on the 8th of November another downwards breakout by OBV correctly predicted the direction for price two days later.
However, on the 19th of October an upwards breakout did not necessarily correctly predict the next direction for price. Price did move higher to a new high on the 2nd of November, but this was still within a larger consolidation and the trend remained down.
In conclusion, this signal today from OBV for GDX is given some weight, but an upwards breakout from the flag pattern would still be required by price for reasonable confidence in an upwards breakout.
While the mid term trend is down and the short term trend is flat, the larger trend may still be up for GDX with the 200 day moving average still pointing upwards.
This analysis is published @ 09:05 p.m. EST.
[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]
Short term downwards movement was expected. Price is now within the target range.
The main Elliott wave count expected a green daily candlestick for Monday, which is what has happened.
A very slight new high was expected before downwards movement.
Price has moved lower, but it did not make a slight new high first.
Yesterday’s analysis was summarised with a warning that the consolidation pattern did not look complete.
Another inside day has essentially moved price sideways within a small range continuing the consolidation.
Upwards movement was again expected.