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An upwards day was expected as likely for Wednesday’s session for Gold. Price moved slightly lower, however, before bouncing upwards at the end of the session.

Summary: A new alternate has a reasonable probability. It is possible this pullback may move lower for another couple of days before it is done. Thereafter, the upwards trend should resume and should show a strong increase in momentum.

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 now have its final fifth wave complete. However, the bottom line is that there cannot be any confidence a low is in place while price remains within the channel.

If minute wave iii has begun, then a target is now calculated for it to end. Confidence in this target may only be had with a breach of the channel.


Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

The duration and depth of this correction suggests the pullback may be at minor degree instead of minute degree.

It is possible that minor wave 1 is over at the recent high and now minor wave 2 may be unfolding lower. If it gets down to the lower edge of the base channel, it should find very strong support there. If this wave count is correct, then price should not break below this trend line.

Minor wave 2 may not move beyond the start of minor wave 1 below 1,195.22. However, if the base channel provides support, price should not get close to this invalidation point.


Gold Elliott Wave Chart Hourly 2017
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So far it is possible that a zigzag downwards is continuing for minor wave 2.

Subwaves 1, 3 and 5 within leading diagonals most commonly subdivide as zigzags, and within diagonals the fourth wave should overlap first wave price territory. Within minor wave 2, minute wave a will fit as a leading expanding diagonal.

The target expects the most common Fibonacci ratio between minute waves a and c. This target would see minor wave 2 fall short of the lower edge of the base channel.

This alternate wave count would allow for another one to two days of slowing downwards movement to complete a pullback, before the larger upwards trend resumes.



Gold Weekly 2017
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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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Another downwards day has a further decline in volume. So far this downwards movement still looks like a typical pullback within a larger upwards trend.

The breakout from a prior consolidation on the 11th of April had support from volume, now price is curving around and down to test support at prior resistance. At this stage, that support is still holding about 1,265.

Overall, this chart remains mostly bullish. Declining volume and Bollinger Bands very slightly contracting as price moves lower indicate this movement is still most likely a pullback and not yet a new downwards trend.


The alternate has a good probability, so price may yet move against long positions for another couple of days. Members with underwater positions would be best advised to take a small loss now and wait for a better reentry if price moves lower. If price reaches down to about 1,250, that would be a good reentry.

If members choose to hold onto underwater positions, do not move stops lower. That would increase risk to beyond 5% of equity and this is most definitely not advised.

If price does not move lower and breaks above 1,278, then another long position may be entered.



GDX Daily 2016
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The long lower wick on this last daily candlestick is bullish. The decline in volume for a day with the balance of volume upwards is bearish.

This downwards trend is not yet extreme, price is not yet at support, and Stochastics is only just entering oversold. There is room for a little more downwards movement. Look for support about 21.50.


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 @ 08:34 p.m. EST.