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Another new low for Gold was not expected.

Summary: Weakness from ATR, extreme oversold conditions for RSI and Stochastics, and now divergence with price and RSI at today’s low all strongly indicate a reversal either here or very soon. A new high above 1,181.36 would provide first confidence in a trend change. A new high above 1,232.48 would add a reasonable level of confidence. The target would be either 1,491 or 1,694.

New updates to this analysis are in bold.

Grand SuperCycle analysis is here.

Last monthly and weekly charts are here. Last historical analysis video is here.


Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

This daily chart works the same way for the two weekly charts in historical analysis. Both weekly charts see downwards movement as an almost complete double zigzag.

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 structure, minor wave A should be a five wave structure.

Minor wave B found resistance at the lower edge of the wide parallel channel about primary wave X. Along the way up, price may find resistance at the lower edge of this channel.

Minor wave C may now again be complete at the hourly chart level.


Gold Elliott Wave Chart Hourly 2016
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Because the last wave down to today’s new low fits best as a three, and looks very much like a three, this indicates downwards movement may not be over.

This zigzag down may be either the beginning of an ending diagonal for the final fifth wave (as per the chart posted in comments at the end of yesterday’s analysis) or a B wave of an expanded flat as in the chart above.

If minuette wave (iv) is completing as an expanded flat correction, then subminuette wave c within it is extremely likely to make at least a slight new high above the end of subminuette wave a at 1,176.24 to avoid a truncation and a very rare running flat.

As soon as price has made a new high above 1,176.24, then this wave count expects a reversal and a fifth wave down. Minuette wave (v) may most likely be either about even in length with minuette wave (i) at 13.26, or about 1.618 the length of minuette wave (i) at 21.45.

Minuette wave (iv) may not move into minuette wave (i) price territory above 1,181.36. A new high above this price point before a new low occurs would invalidate this first hourly chart. At that stage, the second hourly chart below should be used.


Gold Elliott Wave Chart Hourly 2016
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Because RSI has been oversold for some time and now exhibits clear and strong divergence with price at today’s new low, it looks like a low is in. If that is the case, does the Elliott wave count fit?

It does, but this does have some problems.

The sideways chop just before the new low may have been a combination for minuette wave (iv): expanded flat – X – zigzag.

Within the expanded flat of subminuette wave w, micro wave B is a 2.72 length of micro wave A. This is longer than the allowable convention of 2, but there is no rule stating a maximum limit for B waves within flats. I have seen a very few expanded flats with B waves longer than 2 times the length of their A waves. This is possible, but the rarity does reduce the probability of this wave count.

Minuette wave (iv) is mostly a sideways movement as a combination should be, but subminuette wave y does end reasonably short of subminuette wave w. The structure looks forced.

If this wave count is correct, then price should make a new high shortly above 1,181.36. That would provide first confidence in this wave count and a trend change.

If the next wave up is primary wave Y, then it would reach equality in length with primary wave W at 1,491. If the next wave up is primary wave 3, then it would reach 1.618 the length of primary wave 1 at 1,694.

Within the new upwards trend, no second wave correction may make a new low below the start of its first wave below 1,161.95.


Gold Elliott Wave Chart Daily 2016
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Within leading diagonals, sub-waves 2 and 4 must subdivide as zigzags. Sub-waves 1, 3 and 5 are most commonly zigzags but sometimes may also appear to be impulses.

Within this structure, all sub-waves subdivide as zigzags. This wave count meets all Elliott wave rules. This diagonal looks correct.

This wave count has a lower probability at the daily chart level because leading diagonals are not very common structures for first waves. When first waves do subdivide as leading diagonals, they are most often contracting and not expanding. This wave count does not rely upon a rare structure, but it does rely upon a less common structure.

Primary wave 1 lasted 103 days. Primary wave 2 may initially be expected to last about a Fibonacci 55 or 89 days. It should be a big three wave structure.

At the hourly chart level, this alternate wave count would be essentially the same as the main hourly chart; minor wave C may now be complete.

At this stage, there is no divergence in expected direction between this alternate and the main wave count. The structure of upwards movement, if it is clearly a three or five, may assist to tell us which wave count is correct in coming weeks. For now this alternate must be judged to have a low probability due to the problems outlined. It is published to consider all possibilities.


Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

What if a new bear market is underway for cycle wave c? The most likely structure would be an impulse. At this stage, price may be close to the middle of a third wave within primary wave 1 down.

This wave count has a problem of proportion at the daily chart level: minute wave ii lasted 23 sessions and intermediate wave (2) three degrees higher lasted just 8 sessions. Lower degree corrections should be more brief than higher degree corrections. This is not always the case, but when the duration is substantially different then it must necessarily reduce the probability of the wave count.

The pink channel here is a base channel about minute waves i and ii. Price should continue to find resistance at the lower edge of the base channel now that it has breached the channel.

When subminuette wave i is complete, then subminuett wave ii upwards may not move beyond the start of subminuette wave i above 1,232.48.


Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

If an impulse is developing downwards, then the third wave within it would still be incomplete.

Subminuette wave i may now be complete. Subminuette wave ii may unfold over two to a few days to resolve oversold conditions.

At this stage, it looks like the structure of subminuette wave ii may be an expanded flat correction. At 1,183 micro wave C would reach 1.618 the length of micro wave A. This is just above the 0.236 Fibonacci ratio of subminuette wave i at 1,180.

Subminuette wave ii may not move beyond the start of submineutte wave i above 1,232.48.



Gold Weekly 2016
Click chart to enlarge. Chart courtesy of

Another downwards week comes with a further decline in volume. The fall in price is not supported by volume, so it should be suspicious.

On Balance Volume last week breaks below the yellow support line. This is a strong bearish signal that supports the second alternate Elliott wave count.

There is no divergence between price and RSI at the weekly chart level to indicate weakness. RSI is not yet extreme. There is room still for price to fall further.


Gold Daily 2016
Click chart to enlarge. Chart courtesy of

Today’s red candlestick has a small body and a long lower wick. It comes with a decline in already relatively light volume. The fall in price does not have support from volume, so it is suspicious.

RSI has been oversold for some time and now exhibits divergence with price at the new low for today. This is often (not always) a good sign of a low in place. This supports the hourly II Elliott wave count that sees a reversal here.

ADX is still increasing, indicating a downwards trend in place, but it is not yet extreme.

Bollinger Bands agree overall as they are widening, although today saw a small contraction. One day of contraction is not enough though to indicate a change.

ATR disagrees. This trend is weak; each day bears are able to push price a smaller and smaller amount.

Stochastics now shows triple divergence with price at lows.

There is still a downwards trend in place, but a change to either a consolidation or possibly a reversal should be expected here.


GDX Daily 2016
Click chart to enlarge. Chart courtesy of

GDX is in a downwards trend. ADX is increasing and is not extreme, so there is room for this trend to continue.

Short term GDX is consolidating. Until proven otherwise, it would be wisest to assume that this is a consolidation within a mid term downwards trend. The short term Fibonacci 13 day moving average is pointing downwards and is below the mid term Fibonacci 55 day moving average, which is also pointing lower.

The larger trend may still be upwards though: the 200 day moving average is still pointing upwards.

Price is below all three averages and may now find resistance at the shorter 13 day average.

While price has been moving sideways since the last low for 12 days now, volume is overall declining. A small triangle may be forming, which is a continuation pattern. The upper blue trend line of the triangle slopes downwards indicating a downwards breakout is more likely.

ATR is declining as price moves sideways. Bollinger Bands have just begun to contract.

Stochastics is still oversold, so some further consolidation may be required to resolve this. RSI is not oversold though, so the consolidation may not continue for too much longer.

There is some mid term divergence between price and RSI and Stochastics between the lows of the 6th of October and the 14th of November. This indicates some weakness to the last wave down, but it does not signal a trend change.

Overall, the picture for GDX looks much more bearish than bullish. Watch On Balance Volume closely, a breakout of support or resistance there may indicate the next direction for price.

This analysis is published @ 08:30 p.m. EST.