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A pullback has continued lower to test support at prior resistance, which is typical price behaviour.

Volume will be used to indicate what is most likely to happen next.

Summary: A decline in volume today and price at support suggests an upwards day tomorrow. Long positions may have stops set either back within the consolidation zone, so just below 1,261, or using the Elliott Wave invalidation point at 1,240.24 to give the market more room to move. The target for now is 1,392, but a closer target may be calculated when the pullback is confirmed as over.

Always use a stop. Do not invest more than 1-5% of equity on any one trade. Risk management is the most important aspect of trading.

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 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
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The depth and structure of this pullback looks like a second wave correction.

Minute wave ii still fits as a double zigzag. It will not fit as a single zigzag because there is too much overlapping. Within the second zigzag labelled minuette wave (y), the structure of subminuette wave c may still need a final fifth wave down for micro wave 5 to complete it. This may bring price closer to the 0.618 Fibonacci ratio of minute wave i, which is at 1,261.14.

At 1,256.57 subminuette wave c would reach equality in length with subminuette wave a. If price moves below the 0.618 Fibonacci ratio, then this would be a reasonable target.

When minute wave ii is over, then upwards movement should breach the upper edge of this best fit channel. That would provide confidence that a low is in place. At that stage, a target may be calculated for minute wave iii.



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
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Some decline in volume for a second downwards day indicates a lack of support for downwards movement from volume. This may indicate an end to the pullback here.

The prior consolidation zone had resistance about 1,265. The upwards day of the 11th of April was a classic upwards breakout supported by volume. Now price has curved around and down to test support at prior resistance, which is typical price behaviour. It looks most likely that the pullback is now over and price should move up and away.

This tendency does not always hold: there was a recent example on GDX on the 19th of April where it did not and price fell back into a prior consolidation zone. But it does hold more often than it fails, so on balance of probability this looks like a reasonable point to enter long for Gold. Stops may be set back within the consolidation zone. If price reenters the zone, then something else may be happening and long positions should be closed.

Overall, this chart remains more bullish than neutral.



GDX Daily 2016
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Yesterday, the slight increase in volume for a downwards day suggested price may fall a little further and it has. However, support was expected about 22.50. Today closes below support on a strong downwards day that has strong support from volume.

A downwards trend is now indicated for GDX. This has support from increasing volume and range.

However, On Balance Volume may provide support here and halt the fall in price.

Overall, this chart has switched to mostly bearish. If tomorrow completes another downwards day and On Balance Volume breaks below support, then the picture for GDX would be full bore bearish.


Gold Daily 2016
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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.