Last analysis expected it was most likely that price would move sideways and slowly higher. An inside day closing green fits this description exactly.
Summary: It looks like next week price may continue sideways or slowly higher towards a target about 1,276 (which may be too high) before a final upwards wave. Only a new low below 1,214.81 at this stage would indicate upwards movement is over.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
MAIN ELLIOTT WAVE COUNT
For clarity I have decided at this time it may be best to publish on a daily basis weekly charts I, II and IV. Both weekly charts I and II expect a zigzag down to complete and the difference is in the expected depth. Weekly chart IV has a very low probability and will only be given serious consideration if price makes a new high above 1,294.96.
WEEKLY CHART I
Combinations are very common structures. Cycle degree waves normally last one to several years, and B waves do tend to be more time consuming waves than all other waves. Given these tendencies the most likely scenario at this point may be that cycle wave b is an incomplete double combination.
The first structure in the double labelled primary wave W fits as a zigzag. This upwards movement will subdivide as either a three (zigzag) or a five (impulse). It does have a three wave look to it.
The double is joined by a deep three in the opposite direction labelled primary wave X, which is a 0.77 depth of primary wave W. X waves within double combinations are normally very deep; this one looks right.
The second structure in the combination may be either a triangle or a flat correction. Both of these structures have A waves which subdivide as threes.
At this stage, the upwards wave from the low in December 2016 does now look best and subdivide best as a completed zigzag. This may be intermediate wave (A) of a flat correction or a triangle. Because a triangle for primary wave Y would look essentially the same as the second weekly chart below, only a flat correction is considered here. The most common two structures in a double combination are a zigzag and a flat.
This wave count follows the most common scenario and has the best fit.
Within the flat correction of primary wave Y, intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 1,140.27. The most common length for intermediate wave (B) is from 1 to 1.38 times the length of intermediate wave (A), giving a common range from 1,123.08 to 1,057.77.
Intermediate wave (B) may subdivide as any corrective structure, but the most common structure for B waves within flats is a zigzag. At this stage, on the hourly chart it looks like a five down is now complete, which would indicate intermediate wave (B) is a zigzag subdividing 5-3-5.
The daily and hourly charts will follow this weekly chart. That does not mean the other three weekly charts aren’t possible, they are, but the number of charts must be kept reasonable on a daily basis.
WEEKLY CHART II
What if cycle wave b is a triangle? This is also entirely possible. Triangles are not as common as double combinations, but they are not uncommon.
Within the triangle, primary waves A, B and C are all single zigzags. One of the five subwaves of a triangle normally subdivides as a more complicated multiple, usually a double zigzag. This may be what is unfolding for primary wave D.
Primary wave D of a regular contracting triangle may not move beyond the end of primary wave B below 1,123.08.
Primary wave D of a regular barrier triangle should end about the same level as primary wave B at 1,123.08, so that the B-D trend line is essentially flat. What this means in practice is that primary wave D may end slightly below 1,123.08 and the triangle would remain valid. This is the only Elliott wave rule which is not black and white.
Thereafter, primary wave E should unfold upwards and would most likely fall a little short of the A-C trend line. If not ending there, it may overshoot the A-C trend line.
At this stage, the structure on the hourly chart is still the same for both this weekly wave count and the first weekly wave count: a zigzag downwards is unfolding. However, they now diverge in how far down the next wave is expected to go. This second weekly wave count expects a more shallow movement to not end reasonably below 1,123.08.
This daily chart will suffice for both weekly charts above, although the labelling follows weekly chart I.
Both weekly charts expect a zigzag downwards. Weekly chart I expects a deep zigzag for intermediate wave (B) to a minimum at 1,140.27. Weekly chart II expects a zigzag down for primary wave D to not move below 1,123.08 and most likely fall well short of that point.
The daily chart follows the expectations for weekly chart I, but the structure for weekly chart II would be exactly the same.
Within the flat correction of primary wave Y, intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 1,140.27. The most likely corrective structures to achieve the deep correction required for B waves within flats are single or multiple zigzags. These begin with a five, then a three in the opposite direction.
Minor wave A is complete. Minor wave B may be an incomplete zigzag. The first two hourly charts below look at how minor wave B may be completing. The third hourly chart below looks at the less likely possibility that minor wave B is over.
Minor wave B may not move beyond the start of minor wave A above 1,294.96.
Minor wave B may be a simple and relatively quick zigzag. Within minor wave B, minute wave b may now be a complete expanded flat correction.
The lower edge of the best fit channel is pulled down very slightly to show where price found support along the way up during Friday’s session. This will remain the main wave count while price remains within this channel. If price breaks below the lower edge of this channel on Monday, then the next hourly wave count below will switch to the main wave count.
If minute wave c is underway, then it may have begun with a series of three overlapping first and second waves. This wave count expects to see an increase in upwards momentum when markets open on Monday.
It is my judgement that this first hourly wave count is very close to even in probability with the next count below labelled “alternate hourly chart”.
The third “alternate hourly chart II” has the lowest probability buy not by very much.
ALTERNATE HOURLY CHART
It is also entirely possible that minute wave b is not over as a single, relatively quick, expanded flat correction. That may have been only minuette wave (a) within a continuing flat or triangle, or minuette wave (w) within a continuing double combination or double flat correction.
All these structures (flats, triangles, double combinations and double flats) are sideways movements (with the sole exception of expanded flats). If minute wave b is to continue sideways next week, then it may be in choppy overlapping movement with a range of resistance about 1,265 and support about 1,245.
If minute wave b does continue sideways next week, then it may be only at the end that the structure is clear. Labelling within it will change as the structure unfolds.
Because minute wave a looks very much like a five wave structure, minute wave b may not move beyond its start below 1,214.81.
ALTERNATE HOURLY CHART II
It is also still possible, but less likely, that minor wave B is over as a very quick and sharp zigzag.
B waves exhibit a huge variety in structure and price behaviour. It is important to consider all possibilities when B waves unfold.
Minor wave C downwards must subdivide as a five wave structure, either an impulse (more common) or an ending diagonal (less common). So far, with what looks like a fairly clear five down for minute wave i, it looks like minor wave C may be an impulse.
The second wave may not move beyond the start of the first wave within both an impulse and diagonal. This wave count would be invalidated with a new high above 1,264.72.
A new low below 1,214.81 would invalidate the first two hourly charts and provide price confirmation of this second alternate wave count.
WEEKLY CHART IV
What if the bull market beginning in December 2015 remains intact? Price has essentially been moving sideways since that date, so all possibilities should be considered.
After further consideration, the Morning Doji Star at the low labelled intermediate wave (B) will not be considered as a reversal pattern here because it comes in what is essentially a sideways movement. It does not come after a downwards wave, so there is nothing to reverse.
This wave count requires confirmation above 1,294.96. That would invalidate the first three weekly charts (the third is seen in historic analysis only).
It is possible that cycle wave b is continuing higher as a double zigzag. However, double zigzags normally have brief and shallow X waves. The purpose of the second zigzag in a double (and the third when there is one) is to deepen the correction when price does not move deep enough in the first (or second) zigzag. Thus double (and triple) zigzags normally have a strong and clear slope against the prior trend. To achieve this look their X waves normally are brief and shallow.
In this case, primary wave X is neither brief nor shallow. It is a 0.77 depth of primary wave W and lasted 0.74 the duration of primary wave W. Overall, this does not have a typical look of a double zigzag so far.
This wave count also must see the rise up to the high labelled intermediate wave (A) as a five wave impulse, not a three wave zigzag. This looks a little forced, so it reduces the probability of this wave count.
This wave count should only be used if confirmed with a new high above 1,294.96. Low probability does not mean no probability, but should always be given less weight until proven.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Volume this week strongly supports upwards movement. This is bullish.
Since the low in December 2017, price has still made higher highs and higher lows. This upwards trend would be indicated as possibly over only if price makes a new low below 1,194.50.
On Balance Volume is bullish.
ADX and ATR both indicate an unclear and weak trend.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price is finding support on the mid term Fibonacci 55 day moving average.
During Friday’s session, the balance of volume was upwards and volume showed a strong decline. Upwards movement did not have support from volume. This looks like a counter trend movement or small consolidation is underway after the blow off top.
On Balance Volume at the daily chart level is mixed. There is bearish divergence and the last signal given was bullish. Overall, it is more bearish than bullish because the last signal given was bearish divergence.
ADX, ATR and Bollinger Bands all indicate a consolidation. Price lacks volatility and range, which is more normal for a consolidating market than a trending market.
Strongest volume for recent days are the two upwards days of the 7th of April and the 17th of May. This suggests an upwards bias and fits with the trend at the weekly chart level. That would fit Weekly chart IV best, but it may also fit Weekly chart II.
Click chart to enlarge. Chart courtesy of StockCharts.com.
The Evening Star candlestick pattern is supported by heavier volume on the last candlestick. This supports the idea of a high in place now for GDX.
Bollinger Bands expand when markets trend and contract when they consolidate. With the bands contracting as price has moved higher, it looks like this is a counter trend movement. It may now be over. ADX and ATR agree that upwards movement is more likely a counter trend movement than a new upwards trend.
The small inside day for Friday does not change the short term outlook for GDX.
This analysis is published @ 08:20 p.m. EST on 20th May, 2017.