Short term downwards movement was expected. Price is now within the target range.
Summary: Monday may begin with a slight new low to 1,156 – 1,154. Thereafter, an upwards wave should develop as part of a consolidation. The consolidation may last a total of five, eight or thirteen days and may end about 1,211.60 to 1,232.48.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
MONTHLY ELLIOTT WAVE COUNT
It is possible to see the large downwards wave from the all time high as a five wave structure. Super Cycle wave (a) may be an incomplete zigzag, to subdivide 5-3-5.
If primary wave 2 is seen as a longer lasting double combination, then the prior problems with the base channel and proportion are resolved.
Primary wave 1 lasted 3 weeks. Primary wave 2 lasted 51 weeks. Primary wave 2 is a deep 0.65 double combination.
Primary wave 3 lasting 66 weeks is 20.84 short of 1.618 the length of primary wave 1. The close Fibonacci ratio is lost, but this is less than 10% the length of primary wave 3 and so I consider it close enough to say a ratio exists.
Primary wave 4 lasts just 11 weeks and is a shallow 0.35 zigzag. The disproportion between primary waves 2 and 4 is reasonably acceptable; zigzags do tend to be quicker structures than combinations.
Primary wave 5 is an ending contracting diagonal lasting a Fibonacci 89 weeks exactly.
If cycle wave a is a five, then cycle wave b may not move beyond its start above 1,920.18. Cycle wave b may now be a complete single zigzag ending just below the 0.382 Fibonacci ratio of cycle wave a. Cycle wave b is 0.376 the length of cycle wave a. Cycle wave b may have ended close to resistance at the red trend line.
At 1,041 cycle wave c would reach 0.382 the length of cycle wave a. If price keeps falling through this first target, then the next target would be at 835 where cycle wave c would reach 0.618 the length of cycle wave a.
A new support line is added in purple. This is copied over to the weekly chart below.
WEEKLY ELLIOTT WAVE COUNT
If the last high was a trend change at cycle degree, then a five wave structure downwards should develop from there.
Cycle wave c must subdivide as a five wave structure. It may be either an impulse or ending diagonal. Within cycle wave c, the first wave of primary wave 1 must also be a five, either an impulse or a leading diagonal.
When primary wave 1 is complete, then the following correction for primary wave 2 would be expected to be deep, most likely a 0.618 retracement of primary wave 1. Primary wave 2 may not move beyond the start of primary wave 1 above 1,374.81.
DAILY ELLIOTT WAVE COUNT
Price may be now moving into 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 early stage an expectation of a Fibonacci five, eight or thirteen sessions would be reasonable. So far it has lasted just four.
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. If this expectation is wrong, it may be too high; minor wave 4 may be more shallow.
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 may now be 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.
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 now 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 should be joined by a three in the opposite direction labelled minute wave x. There is no minimum nor maximum for X waves within combinations. X waves must only subdivide as corrective structures, which may subdivide as any corrective structure including multiples.
Overall, this wave count expects to see for several more days choppy overlapping movement that may include a new low (but it does not have to make a new low). It is 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 will change in coming days.
I have spent some considerable time today on the downwards movement labelled minute wave b. This will not fit as a single zigzag, so it is still labelled as a double zigzag. This has the best fit. The second zigzag in the double may be almost complete and within it subminuette wave c must subdivide as a five wave structure. So far it looks like an impulse. Within the impulse, micro wave 4 may not move into micro wave 1 price territory above 1,161.49. In the very short term, a new high above 1,161.49 may not be a fourth wave correction, which means subminuette wave c would have to be over. This would add a little confidence to seeing a low in place, at least short to mid term.
At 1,156 minuette wave (y) would reach 1.618 the length of minuette wave (w). At 1,154 subminuette wave c would reach 1.618 the length of submineutte wave a. This gives a $2 target zone for one more low to compete minute wave b.
ALTERNATE MONTHLY ELLIOTT WAVE COUNT
The large wave down labelled Super Cycle wave (a) may be seen either as a three or a five. This alternate monthly chart sees it as a three.
If Super Cycle wave (a) is a three, then Super Cycle wave (b) may make a new high above its start at 1,920.18.
The larger structure is seen as Grand Super Cycle wave IV. When a fourth wave begins with a three wave structure for its A wave, then a flat, combination or triangle is indicated. In this case, with Super Cycle wave (a) a double zigzag, a combination for Grand Super Cycle wave IV may be eliminated because multiples may not subdivide into multiples. This leaves two possible structures for Grand Super Cycle wave IV: a flat or a triangle.
If Grand Super Cycle wave IV is unfolding as a flat correction, then within it Super Cycle wave (b) must retrace a minimum 0.9 length of Super Cycle wave (a) at 1,832.78.
If Grand Super Cycle wave IV is unfolding as a triangle, then there is no minimum requirement for Super Cycle wave (b) within it. While there is no minimum, Super Cycle wave (b) is highly unlikely to be over here because it should be deeper. A common range for subwaves of triangles is about 0.8 to 0.85 the prior wave; this is from 1,745 to 1,789. For a triangle to have the right look, Super Cycle wave (b) should be only about half way through.
Super Cycle wave (b) must subdivide as a three wave structure.
If the large wave down from the all time high is seen as a double zigzag, then the proportions are good and all subdivisions fit perfectly.
The first zigzag in the double is labelled cycle wave W. Within cycle wave W, primary wave B is a combination and primary wove C is just 8.49 short of 1.618 the length of primary wave A.
The double is joined by a brief shallow three in the opposite direction labelled cycle wave X. X waves within double zigzags are normally very brief and shallow, so it is okay that this one lasted just 8 weeks. Duration of waves is a rough guideline only and sometimes corrections are quicker than impulses.
The second zigzag in the double labelled cycle wave y exhibits no Fibonacci ratio to the first zigzag labelled cycle wave w. Within cycle wave y, there is no Fibonacci ratio between primary waves A and C, primary wave B is an expanded flat correction, and primary wave C is an ending contracting diagonal.
WEEKLY ELLIOTT WAVE COUNT
The wave up from the low on the 3rd of December, 2015, fits best as a three and looks like a zigzag. It is possible that it may be a five.
If cycle wave a is subdividing as a three, it may be an incomplete double zigzag. The first zigzag in the double is labelled primary wave W and the double is joined by an incomplete three in the opposite direction labelled primary wave X.
The maximum number of corrections within multiple corrective structures is three. To label multiples within multiples increases the maximum beyond three violating the rule. Within each of W, Y and Z, they may only be labelled simple corrective structure A-B-C (or A-B-C-D-E in the case of triangles). X waves however are not included in the maximum; they are joining structures in the opposite direction and may subdivide as any corrective structure including multiples.
Primary wave X has now moved below the end of intermediate wave (B) within primary wave W. It is my judgement that this reduces the probability of this wave count although no rules nor guidelines are broken. There is no rule stating a limit for X waves within double zigzags or double combinations, but within double zigzags the X wave is usually very brief and shallow and this one is now neither.
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 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 gold channel is a best fit about downwards movement. The overshoot at the end of Friday’s session looks like a small capitulation spike, which does not add confidence to this wave count.
This wave count expects to see an increase in downwards momentum on Monday as a third wave down at four degrees completes.
Micro wave 4 may not move into micro wave 1 price territory above 1,165.68.
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.
There is now triple bullish divergence with price and RSI, and RSI is oversold. This is a strong warning that bears are tired. We should expect a bounce here or very soon. While it is still possible that price may move a little lower, any downside movement should be very limited.
There was a small increase in volume for Friday’s session and the balance of volume was down. There was a little support for the fall in price, but not much. Volume remains very light. This small increase may be indicting a slight new low for Monday.
On Balance Volume remains constrained. It will be watched closely next week. A breakout may indicate the next direction for price.
ADX still indicates a downwards trend in place. ATR and Bollinger Bands still disagree. This trend looks tired and unhealthy.
It would be most reasonable to expect either a consolidation or a new upwards trend from here.
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.
Friday’s downward day came with some reasonable volume. This is some further small indication that there looks like more downwards pressure than upwards and a downwards breakout looks more likely.
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 remains constrained. A breakout by OBV may indicate the next direction for price.
Overall, this GDX analysis is in line with the new main Elliott wave count for Gold spot price.
This analysis is published @ 09:07 p.m. EST on 10th December, 2016.