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A correction was expected to continue for another one to few days. Today’s red candlestick with a long lower wick mostly fits that expectation.

Price remains above the invalidation point but the wave count no longer has the right look, so today it is changed.

Summary: The pullback is likely to be another second wave correction that looks fairly likely to be over here. Look out for strong upwards movement. The target is now at 1,355 and the invalidation point is now at 1,240.24.

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 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.

The material change today to the wave count is to see only minute wave i within minor wave 3 complete. The middle of this big third wave now looks unlikely to have passed, so it is still ahead. This has a better look on this bigger picture view.

Minute wave ii may not move beyond the start of minute wave i below 1,240.24.


Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

This daily chart will suffice for both weekly charts, which can be seen in the last published historic analysis.

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, only minute wave i may now be complete and minute wave ii may be over here, or it may move a little lower but not beyond the start of minute wave i below 1,240.24.

Minute wave iii should show an increase in upwards momentum and be supported by volume. Thereafter, minute wave iv should be shallow and may be very brief. When minute wave iv is complete, then minute wave v should show a further increase in momentum and may end 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 Hourly 2017
Click chart to enlarge.

The depth and structure of this pullback looks like a second wave correction and not a fourth wave.

Fibonacci ratios are noted on both hourly wave counts, so that members may compare them, and both wave counts have one ratio between two of the three actionary waves within upwards impulses.

If minute wave i is a complete impulse, then within it there is good alternation between the flat of minuette wave (iv) and the zigzag of minuette wave (ii).

Within minuette wave (iii), there is alternation between the zigzag of subminuette wave ii and the triangle of subminuette wave iv.

Minute wave i does not fit neatly within an Elliott channel, but Gold’s impulses often do not fit within these channels.

Minute wave ii fits as a double zigzag, so it is highly likely that the correction is over here, if this is correct, because minute wave ii would have to subdivide as a very rare triple zigzag for it to continue lower. The rarity of triples means the probability of that happening is very low. This statement assumes my labelling of the double zigzag is correct.

If the target for minute wave iii is wrong, it may not be high enough. Gold’s third waves often extend and it is fairly common for them to exhibit a larger Fibonacci ratio. If price gets up to this target and the structure is incomplete, of if it keeps rising through the target, then a second higher target would be calculated.


Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

The proportion of minute waves ii and iv for this wave count now does not look right.

The lack of alternation now further reduces the probability of this wave count. It was expected initially that minute wave iv would be shallow and sideways, a combination or flat or triangle, but it has not met the requirements for any of those structures and fits neatly as a double zigzag.

Although there is a perfect Fibonacci ratio within this wave count, that is not enough to increase the probability above the main wave count. The problems of disproportion and lack of alternation are too great.



Gold Weekly 2017
Click chart to enlarge. Chart courtesy of

There are a lot of assumptions out there about Gold and its relationships to various other markets. Happily, there is a quick and easy mathematical method to determine if Gold is indeed related to any other market: StockCharts have a “correlation” option in their indicators that shows the correlation coefficient between any selected market and the one charted.

The correlation coefficient ranges from -1 to 1. A correlation coefficient of 1 is a perfect positive correlation whereas a correlation coefficient of -1 is a perfect negative correlation.

A correlation coefficient of 0.5 to 1 is a strong positive correlation. A correlation coefficient of -0.5 to -1 is a strong negative correlation.

Any two markets which have a correlation coefficient that fluctuates about zero or spends time in the 0.5 to -0.5 range (shown by highlighted areas on the chart) may not be said to have a correlation. Markets which sometimes have a positive or negative correlation, but sometimes do not, may not be assumed to continue a relationship when it does arise. The relationship is not reliable.

For illustrative purposes I have included the correlation coefficient between Gold and Silver, which is what strong and reliable correlation should look like.

Gold made a higher high and a higher low this week, although the candlestick has closed red. An increase in volume is bullish. The long lower wick on the candlestick is also bullish although the colour is bearish.

ADX does not yet indicate a trend. If it reaches 15 or above, then it would indicate an upwards trend. RSI indicates there is still plenty of room for price to rise. This chart is bullish.


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.

The long lower wicks on the last five daily candlesticks are bullish. This last daily candlestick is very bullish with a very long lower wick and the small real body.

After a consolation period followed by an upwards breakout supported by volume on the 11th of April, price has now curved around and down to test support at prior resistance. So far it looks like price is finding support just above 1,265, which was prior resistance for the consolidation. This is typical behaviour following a breakout.

The only concern today is the increase in volume for a downwards day, with the balance of volume downwards. Volume supported the fall in price today. This indicates a little more downwards movement to again test support is fairly likely, but this is not definitive though. Occasionally, during a pullback, a strong day may be seen at the end before the trend continues. There is a good example of this behaviour on the 17th of December, 2015, and again on the 14th of January, 2015, during the third wave example below.

Overall, this chart remains fairly bullish. This looks like a pullback that is either over here or should be within another day.



GDX Daily 2016
Click chart to enlarge. Chart courtesy of

Price is back within the prior consolidation zone. This zone is now widened. There is some distance to go before price may find support about 22.50.

With ATR declining, ADX declining, and Bollinger Bands tightly contracted, this downwards movement looks like a pullback and not a new downwards trend. Support is about 22.75 and next about 22.50.

Some increase in volume today for a downwards day, with the balance of volume downwards, is slightly bearish. This suggests price may yet fall a little further before the pullback is over.


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.


Longs with stops set at 1,270.89 would have been whipsawed out.

Towards the end of the session another long position was entered about 1,274. If any long positions are now positive and the entry point is relatively close, it may be a good technique to now move stops to breakeven. This eliminates the risk of having to ride out a deep second wave correction. If the pullback does continue, then a better entry point may be found.

If using this risk management technique, then be prepared to have long positions closed out for no loss nor gain. Traders would then have to be vigilant and watch the market closely for another entry point lower down.

Profit targets may be set at 1,355 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.

This analysis is published @ 09:27 p.m. EST.