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Another very small range day completes a small doji candlestick. This fits neatly with the expectations short term for the Elliott wave count.

Summary: It still looks like another new low may unfold before Gold either turns or begins a time consuming consolidation. The target is either 1,116 – 1,114 or 1,118.

New updates to this analysis are in bold.

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

Grand SuperCycle analysis is here.

MAIN ELLIOTT WAVE COUNT

The first daily chart will not be published today. The idea is still just valid, but price behaviour strongly suggests it is wrong. For reference it was last published here.

SECOND DAILY CHART

Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

This main wave count expects that Gold remains in a bear market. Downwards movement is seen as an unfolding impulse for primary wave 1 of cycle wave c.

If an impulse is unfolding lower, then there is a problem of proportion between the correction labelled minute wave ii and the two earlier corrections labelled minor wave 2 and intermediate wave (2). Minute wave ii is much longer in duration than second wave corrections one and two degrees higher. This reduces the probability of this wave count.

Also, this wave count must ignore what looks like a fairly obvious triangle early on in this downwards movement; a triangle may not be the sole corrective structure of a second wave.

Intermediate wave (3) has no Fibonacci ratio to intermediate wave (1). It is more likely then that intermediate wave (5) will exhibit a ratio to either of (1) or (3). At 1,116 intermediate wave (5) would reach equality in length with intermediate wave (1).

Ratios within intermediate wave (3) are: minor wave 3 has no Fibonacci ratio to minor wave 1, and minor wave 5 is 1.27 longer than 0.146 the length of minor wave 3.

Ratios within minor wave 3 are: minute wave iii has no Fibonacci ratio to minute wave i, and minute wave v is 2.97 longer than 0.618 the length of minute wave i.

Ratios within minute wave v of minor wave 3 are: minuette wave (iii) is 2.65 longer than 1.618 the length of minuette wave (i), and minuette wave (v) has no Fibonacci ratio to either of minuette waves (i) or (iii).

Within intermediate wave (5) so far, minor wave 3 is 3.31 shorter than 1.618 the length of minor wave 1. Minor wave 5 may not exhibit a Fibonacci ratio to either of minor waves 1 or 3.

While price remains within the best fit yellow channel, it should be expected that the downwards trend remains intact. This wave count expects one more low and then a trend change for Gold.

Minor wave 4 may not move into minor wave 1 price territory above 1,151.95. At any stage, a new high above this point and above the yellow channel would indicate a trend change for Gold. Use this channel and this price point as confirmation of a low in place for Gold.

I have three hourly charts for you in an attempt to cover multiple possibilities for this fourth wave correction. They are presented in order of probability. All three work in the same way for the alternate wave count.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

It looks most likely at this stage that the triangle for the fourth wave is incomplete.

Triangles normally adhere well to their trend lines. They may occasionally have some small overshoots but they should not breach trend lines.

The A-C trend line here is drawn across highs. This line may be where minute wave c ends. Minute wave c may not move beyond the end of minute wave a above 1,142.11. This invalidation point for the triangle is black and white.

The lower B-D trend line is also drawn across lows. This may be where minute wave d ends. Minute wave d for a contracting triangle may not move beyond the end of minute wave b below 1,125.80. For a barrier triangle, minute wave d may end about the same level as minute wave b. A triangle will remain valid as long as the B-D trend line remains essentially flat. In practice, this means minute wave d may end slightly below minute wave b. This invalidation point is not black and white; this is the only Elliott wave rule that is not black and white.

The final zigzag for minute wave e is most likely to fall short of the A-C trend line. If it does, it may end when price comes up again to touch the yellow channel. If minute wave e does not end there, then it may overshoot the A-C trend line.

This wave count is perfectly in line with the S&P for the short term; Gold and the S&P are mirror images at this stage.

When a triangle is complete, then expect a following fifth wave down. Gold often exhibits fifth waves out of its fourth wave triangles, which are surprisingly short and brief.

After a new low, Gold is expected to then turn and move overall higher for several weeks. Draw a Fibonacci retracement along the length of primary wave 1 and use the 0.618 Fibonacci ratio as a target for primary wave 2.

HOURLY CHART – FIRST ALTERNATE

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

This hourly chart follows on directly from how the triangle was labelled in last analysis. It is possible that the triangle is complete.

The final wave E of triangles most often undershoots the A-C trend line. If it overshoots, then it usually does so quickly and not by too much. The overshoot here is large and time consuming. This does not look quite right, but it does fit and should be considered.

If this wave count is correct, then a new low reasonably below 1,125.80 would indicate it is more likely. At that stage, expect the target to be reached and a new low.

Thereafter, still expect a primary degree trend change for Gold.

HOURLY CHART – SECOND ALTERNATE

Gold Elliott Wave Chart Hourly 2016
Click chart to enlarge.

What if Gold is not completing a fourth wave triangle? What if the fourth wave is unfolding as a flat correction?

Within a flat, both waves A and B must unfold as three wave structures.

Minute wave a here is a double zigzag, which is classified as a three.

Minute wave b may be completing a zigzag and within it minuette wave (b) may be a small triangle.

Within the flat, minute wave b must retrace a minimum 0.9 length of minute wave a at 1,124.98. This minimum has not yet been met, so minute wave b cannot be complete.

The normal range for minute wave b within a flat correction is from 1 to 1.38 the length of minute wave a at 1,123.08 to 1,115.85.

This wave count expects essentially the same movement next as the first hourly wave count: a little more sideways movement, followed by a downwards breakout to about the same point, then a reversal. The risk here is that it will be impossible to know for sure which one is correct if price follows this expected pathway, and as they both expect the same subdivisions a careful analysis of Elliott wave structure will not be helpful either.

This wave count essentially illustrates the risk that not one but two more lows may be seen before Gold finds its final low.

At its end, minor wave 4 would see a substantial overshoot of the upper edge of the yellow channel. If this is quickly reversed, then this wave count would be possible. But if the overshoot is deep and time consuming, then this wave count should be discarded.

Minor wave 4 may not move into minor wave 1 price territory above 1,151.95. This is the price point which will differentiate between the main hourly chart and this second alternate.

ALTERNATE ELLIOTT WAVE COUNT

The first alternate daily chart will also not be published today. Price behaviour does not support it at this stage.

SECOND DAILY CHART

Gold Elliott Wave Chart Daily 2016
Click chart to enlarge.

This alternate wave count expects that a zigzag is unfolding downwards within a larger continuing bull market for Gold. When primary wave X or 2 is complete, then this wave count expects the bull market to resume for Gold to new highs.

This triangle for resolves the problem of proportion that the main wave count has. It sees a triangle unfolding early on in this downwards movement as intermediate wave (B).

Within intermediate wave (C), minor wave 3 is 15.48 longer than 1.618 the length of minor wave 1. This is a big difference but less than 10% the length of minor wave 3, so it may be considered a reasonable Fibonacci ratio.

Ratios within minor wave 3 are: minute wave iii is 6.44 short of 0.618 the length of minute wave i, and minute wave v is just 0.34 short of 0.236 the length of minute wave i.

Ratios within minute wave iii are: minuette wave (iii) is 2.56 longer than 1.618 the length of minuette wave (i), and minuette wave (v) has no Fibonacci ratio to either of minuette waves (i) or (iii).

Within minor wave 5 so far, minute wave iii is 3.31 short of 1.618 the length of minute wave i.

At 1,118 minor wave 5 would reach 0.618 the length of minor wave 1.

Minute wave iv may not move into minute wave i price territory above 1,151.95.

Hourly charts will not be provided here for this alternate. They would look exactly the same as the three hourly charts for the main wave count. All three ideas also work in exactly the same way for this alternate wave count. For this alternate, the degree of labelling at the hourly chart level would all be one degree lower.

TECHNICAL ANALYSIS

WEEKLY CHART

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

A small inside week is finding strong support about 1,130. Overall, the week closed red on lighter volume. The fall in price was not supported by volume this week. This looks like a small consolidation.

Price for the last three weeks is falling with declining volume. The fall in price is not supported by volume; the market is falling of its own weight. This is not a sign of a healthy sustainable trend.

There is no support line close by for On Balance Volume.

RSI is close to but not yet oversold. There is room for price to fall further.

ADX is indicating a healthy downwards trend with plenty of room to continue. It is not extreme as it is below 35. The -DX line is above the +DX line. The black ADX line is not above the -DX line yet, so this trend is not extreme.

DAILY CHART

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

A small pennant pattern is unfolding. These are fairly reliable continuation patterns. The breakout is most likely to be downwards.

The pattern is supported by declining volume as price moves sideways.

A target about 1,085 is calculated using the measured rule.

On Balance Volume remains constrained. A breakout may indicate the next direction for price.

The trend is down. Price is below all three moving averages and all three are pointing downwards.

The trend is extreme though. ADX is above 35 and the black ADX line is above both -DX and +DX lines.

ATR is declining as price moves sideways in the pennant pattern. This is normal for a consolidation.

Both Stochastics and RSI are oversold and both exhibit divergence.

The trend is nearing its end, but the pennant pattern indicates at least one more low before it turns.

GDX DAILY CHART

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

The larger flag pattern gives a target about 14.50. The breakaway gap out of the pattern is still providing resistance.

A smaller consolidation looks like it is unfolding. I have drawn tentative pennant pattern lines across it today. If this pattern is correct, the breakout should be downwards. The mast is 2.8 in length, so the target would be about 16.2.

ADX is now extreme above 35. The black ADX line is now above both the +DX and -DX lines indicating an extreme trend.

The target at 14.50 may be too optimistic.

The yellow line on On Balance Volume is slightly adjusted. This is now providing resistance. A break above either of these lines would be a bullish signal from GDX. If that happens, then a low may be in place.

This analysis is published @ 12:15 a.m. EST on 24th December, 2016.