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Downwards movement was expected to continue for the main Elliott wave count after last analysis.

The target remains the same and the alternate now has a new target.

Summary: The target for downwards movement to be interrupted is at 1,115 or 1,064. A break above the yellow best fit channel and then above 1,163.25 would indicate either a trend change or a consolidation has arrived. GDX looks bearish; use the target 14.50, and use the breakaway gap for resistance.

New updates to this analysis are in bold.

Last monthly and weekly analysis is here, video is here.

Grand SuperCycle analysis is here.

DAILY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

Primary wave 1 may be close to completion.

Corrections are more brief and shallow than expected.

The purple trend line is copied over from weekly charts. Downwards movement has now broken below this important support line, so this line may now provide resistance forcing upcoming corrections to be shallow.

There is no Fibonacci ratio between intermediate waves (1) and (3). At 1,115 intermediate wave (5) would reach equality in length with intermediate wave (1).

Ratios within intermediate wave (3) are: there is no Fibonacci ratio between minor waves 3 and 1, and minor wave 5 is 1.92 longer than 0.382 the length of minor wave 1.

Ratios within minor wave 3 are: there is no Fibonacci ratio between minute waves i and iii, and minute wave v is 2.52 short of 0.618 the length of minute wave iii.

Ratios within minute wave v are: there is no Fibonacci ratio between minuette waves (i) and (iii), and minuette wave (v) is 0.62 longer than equality in length with minuette wave (i).

Within intermediate wave (5), no second wave correction may move beyond the start of its first wave above 1,164.78.

This wave count still has a problem of proportion between minute wave ii and minor wave 2 and intermediate wave (2). Minute wave ii should be more brief than second wave corrections one and two degrees higher, and a triangle may not be seen for a second wave in this position because second waves may not subdivide as triangles.

HOURLY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

Intermediate wave (5) must subdivide as a five wave structure. So far minor waves 1 and 2 are complete within it.

Within minor wave 3, if the degree of labelling here is moved down one degree and it is extending, then no second wave correction may move beyond its start above 1,163.25.

If the degree of labelling within minor wave 3 is correct, then minor wave 4 may not move into minor wave 1 price territory above 1,135.10.

Minor wave 4 may be unfolding as either an expanded flat, running triangle or combination.

A new high above 1,135.10 short term could not be a fourth wave correction, which would mean that minor wave 3 is not over and is extending. If this happens, then the target at 1,115 would be inadequate.

At 1,115 intermediate wave (5) would reach equality in length with intermediate wave (1).

ALTERNATE DAILY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

Downwards movement for primary wave X or 2 fits as a single zigzag.

Within downwards movement, this wave count sees a triangle labelled intermediate wave (B). This has a better fit than trying to see this as first and second waves (a second wave may not subdivide as a triangle). This wave count does not suffer from the problems of proportion that the main wave count does.

Primary wave X or 2 is now a very deep correction.

Initial confidence in a trend change may come with a breach of the upper edge of the small pink channel.

Within intermediate wave (C), minor wave 3 has no Fibonacci ratio to minor wave 1. At 1,064 minor wave 5 would reach equality in length with minor wave 1.

Ratios within minute wave iii are: there is no Fibonacci ratio between minuette waves (i) and (iii), and minuette wave (v) is 0.62 longer than equality in length with minuette wave (i) (this piece of movement is seen in the same way as the main wave count; for the main wave count it is a fifth wave and here it is a third wave).

ALTERNATE HOURLY ELLIOTT WAVE COUNT

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

At the hourly chart level, both wave counts today require a five wave impulse to complete downwards. The targets are different, but the short and mid term invalidation points are the same.

The structure is seen in the same way for both wave counts, but this alternate is one degree lower.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2016
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.

DAILY CHART

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

Up until today’s candlestick, a reasonable analysis of this chart would have noted the following:

– A bullish long lower wick on yesterday’s candlestick.

– A balance of volume upwards for yesterday’s session with some increase.

– Multiple divergence with price and RSI and Stochastics.

– Declining ATR and contracting Bollinger Bands.

Taken together this picture is fairly bullish. The only warning yesterday to a bullish conclusion may have been that price continued to find resistance at the short term Fibonacci 13 day moving average.

Now today the picture looks less bullish.

There is now only smaller and single divergence with price and RSI.

A downwards session for today closes well below the short term blue support line for price on a day with an increase in volume. This is bearish.

ADX still indicates a downwards trend in place and it is not yet extreme at 35.

ATR is now showing some increase and Bollinger Bands may be beginning to widen.

Stochastics shows still multiple and longer term bullish divergence with price.

On Balance Volume is still constrained. The upper purple resistance line has now been slightly adjusted.

Overall, some strength has returned to this market to the downside. There is still room for price to fall further.

The 13 day moving average will be expected to continue to provide resistance, until it does not. A break by price above this average would indicate an end to the downwards trend and either a trend change or a longer consolidation.

GDX DAILY CHART

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

The gap down today looks like a breakaway gap out of the bear flag pattern. Do not expect this gap to be filled short term; breakaway gaps are often not filled.

The increase in volume for another downwards day supports the fall in price.

Using the measure rule, a target about 14.50 is expected.

ADX indicates a downwards trend is in place.

ATR shows further increase today. The trend may be beginning again after consolidation within the bear flag pattern.

Bollinger Bands are beginning to widen.

On Balance Volume has finally broken below support, adding confidence to the bearish picture from price. If OBV turns up here or soon, then some resistance should be expected at the yellow line.

GDX is in a downwards trend, so I expect the target at 14.50 is fairly likely to be reached. The breakaway gap may be used as resistance.

This analysis is published @ 07:43 p.m. EST.