Select Page

Yesterday’s analysis expected another shallow correction to continue sideways. This is mostly what has happened. Price bounced up almost exactly at the lower edge of the channel on the hourly chart, where support was expected as fairly likely.

Summary: The fourth wave correction may continue sideways for another day. When it is done, then upwards momentum is expected to increase strongly. The target for long positions remains at this stage at 1,333. If this is wrong, it may not be high enough.

New updates to this analysis are in bold.

Grand SuperCycle analysis is here.

Last monthly and weekly charts are here.



Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

This daily chart will suffice for both weekly charts.

Upwards movement at primary degree is either a third wave (first weekly chart) to unfold as an impulse, or a Y wave (second weekly chart) to unfold as a zigzag. If upwards movement is a zigzag for primary wave Y, then it would be labelled intermediate waves (A) – (B) and now (C) to unfold. It is most likely a third wave because cycle wave a is most likely to subdivide as an impulse.

Intermediate wave (1) or (A) is a complete five wave impulse lasting 39 days. Intermediate wave (2) or (B) looks like an expanded flat, which is a very common structure.

So far, within intermediate wave (3) or (C), minor waves 1 and 2 are now complete. Minor wave 3 looks to have begun. Within minor wave 3, the middle portion for minute wave iii may now be complete. Minute wave iv may not move into minute wave i price territory below 1,261.00.

Minute wave v is expected to be very strong, possibly ending with a blow off top.

A cyan trend line is added to all charts. Draw it from the high in October 2012 to the high in July 2016. This line has been tested five times. Price is finding resistance at the cyan trend line now. If price can break through resistance here after some consolidation, then that may release energy to the upside for the end of minor wave 3.


Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

This chart steps back to see all movement since the important low on the 3rd of December, 2015.

To see how this fits into the bigger picture, please see the last historic analysis linked to at the start of this analysis.

The first upwards movement labelled primary wave 1 fits well as a five wave impulse. Primary wave 2 fits as a zigzag. It would be difficult to see the downwards wave of primary wave 2 as an impulse because that would require ignoring what looks very much like a triangle at its start (labelled intermediate wave (B) ). To see this as an impulse that movement would need to be a second wave correction, but second waves do not subdivide as triangles.

Primary wave 3 should have begun. Within it intermediate waves (1) and (2) should be complete. Intermediate wave (2) is a very common expanded flat correction.

My only concern at this stage is the labelling of minute wave iii as complete. It is possible that the middle portion of this third wave at three degrees has passed, if the next waves up for minute wave v and minor wave 5 are both very long and strong extensions.

It may also be possible that the middle of the big third wave has not passed and the degree of labelling within minor wave 3 needs to be moved down one degree. If minute wave ii is yet to unfold, it may not move beyond the start of minute wave i below 1,240.24.


Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

Minute wave ii was a deep 0.79 double zigzag, which lasted 25 hours, and on the daily chart it shows as only one session.

Given the guideline of alternation, minute wave iv may be expected to most likely be a flat, combination or triangle. All of these structures may include a new high above its start at 1,294.96 as part of the correction. A new high does not indicate minute wave iv is over.

So far a zigzag may have completed lower and this may be only minuette wave (a) of a flat or triangle, or minuette wave (w) of a combination.

If minute wave iv is a flat correction, then minuette wave (b) must retrace a minimum 0.9 length of minuette wave (a) at 1,293.67.

The normal range of minuette wave (b) within a flat correction would be from 1,294.96 to 1,299.88.

There is no minimum requirement for minuette wave (b) within a triangle, nor minuette wave (x) within a combination. They both only need a three wave structure upwards to complete.

Minuette wave (b) or (x) may be unfolding as an expanded flat correction. This may be continuing if it is minuette wave (b) in order to reach the minimum requirement at 1,293.67. Or if it is minuette wave (x) within a combination, it may be over already.

So far minute wave iv has lasted 49 hours. Flats, triangles and combinations are usually longer lasting structures than single and multiple zigzags. Minute wave iv may end within the next session, or it may possibly take a little longer.

It is possible that minute wave iv is over at the low labelled subminuette wave b, where price came down to find support at the lower edge of the pink channel. However, if it was over there, then the only corrective structure which would fit would be a double zigzag. This is possible, but the probability is low because it would see no alternation with the double zigzag of minute wave ii. Because of the lack of alternation I would hesitate to publish this idea.

The Elliott channel is drawn using Elliott’s first technique: the first trend line is drawn from the ends of minute waves i to iii, then a parallel copy is placed upon the end of minute wave ii. This channel does not perfectly contain the start of minute wave iii, but it may still assist to show where minute wave iv finds support.

Fourth waves are not always contained within these channels though. If minute wave iv moves below the lower pink trend line, then the channel must be redrawn using the second technique when minute wave iv is complete.



Gold Weekly 2017
Click chart to enlarge. Chart courtesy of

The relatively long upper wicks of the last two weekly candlesticks are a little bearish. The increase in volume last week is bullish.

The purple trend line on On Balance Volume has been carefully drawn to be as conservative as possible, sitting along the prior two highs. This trend line has a very shallow slope and is reasonably long held. It has only been tested twice before. It has some reasonable technical significance. Last week it is slightly breached offering a reasonable bullish signal. However, for the signal to have more weight it needs a clearer breach.


Gold Daily 2016
Click chart to enlarge. Chart courtesy of

I do not have confidence in the data from StockCharts for the daily candlestick for the 12th of April. As the session ended, I did not see a spike down to 1,278, which is their close, and creates the long upper wick on their candlestick.

Tuesday completes a downwards day with a lower low and a lower high. The candlestick closed green and the balance of volume was upwards. A surge in volume for Tuesday is bullish. The long lower wick on the candlestick is bullish.

Give considerable weight to On Balance Volume: today, it looks very bullish. This is strong support for the Elliott wave count.

RSI can continue to become more extreme. It does not yet exhibit divergence with price, so there is room for price to move higher. ADX is not yet extreme.

Expect the upwards trend to continue. Corrections present an opportunity to join the trend.


I have left my stop on my long position at 1,270.89. If price comes down again to the lower trend line, it may present another opportunity to add to long positions. Stops for new long positions may also be set at 1,270.89, but there is a risk here that a whipsaw may close out longs only to see price move higher. Alternatively, set stops just below 1,261 for new long positions here, and reduce position size to keep risk from 1-5% of equity.

Profit targets may be set at 1,333 in the first instance.

As always, risk management is the single most important aspect of trading. Take it seriously. My two Golden Rules are:

1. Always use a stop.

2. Invest only 1-5% of equity on any one trade.



GDX Daily 2016
Click chart to enlarge. Chart courtesy of

This chart remains bullish with some neutrality.

Price is behaving typically: after a breakout it often curves back to test prior support / resistance. When price does this, it offers us a gift: an entry into a trend after the breakout has given confirmation.

The breakaway gap should offer support, so set stops just below it at 23.71. If that gap is closed, then it would not be a breakaway gap and something else would be happening, so long positions should be exited.


Gold Daily 2016
Click chart to enlarge.

This study of a third wave will be left in daily analysis until the current third wave is either proven to be wrong (invalidated) or it is complete.

This third wave spans 59 trading days.

It was not until the 40th day that the overlapping ended and the third wave took off strongly.

The middle of the third wave is the end of minute wave iii, which ended in a blow off top.

There is excellent alternation between second and fourth wave corrections.

This third wave began with a series of five overlapping first and second waves (if the hourly chart were to be added, it would be seven) before momentum really builds and the overlapping ends.

The fifth wave of minuette wave (v) is the strongest portion.

This third wave curves upwards. This is typical of Gold’s strong impulses. They begin slowly, accelerate towards the middle, and explode at the end. They do not fit neatly into channels. In this instance, the gold coloured curve was used.

Gold Daily 2016
Click chart to enlarge. Chart courtesy of

This trend began after a long consolidation period of which the upper edge is bound by the blue trend line. After the breakout above the blue trend line, price curved back down to test support at the line before moving up and away.

RSI reaches overbought while price continues higher for another five days and RSI reaches above 85. The point in time where RSI reaches overbought is prior to the strongest upwards movement.

ADX reached above 35 on the 9th of February, but price continued higher for another two days.

The lesson to be learned here: look for RSI to be extreme and ADX to be extreme at the same time, then look for a blow off top. Only then expect that the middle of a big third wave is most likely over.

The end of this big third wave only came after the blow off top was followed by shallow consolidation, and more highs. At its end RSI exhibited strong divergence with price and On Balance Volume gave a bearish signal.

Third waves require patience at their start and patience at their ends.

This analysis is published @ 09:05 p.m. EST.