Select Page

Price moved slightly lower, which was not what the main wave count expected, but it was allowed for. No confirmation of a trend change has yet been seen.

Summary: The upwards trend should resume here or very soon. Confidence may be had in this expectation if price makes a new high above 1,268.38 and breaks above the best fit channel on the hourly chart. The target for now is about 1,392.

Price should find very strong support at the lower edge of the base channel if price does move lower, which would be about 1,244 now for tomorrow’s session.

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 looks unlikely to have passed, so it is still ahead.

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 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.

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.

If the pullback does continue, then price may come down to touch the lower edge of the base channel. If that happens, it would offer us a gift of a very good entry point to join the upwards trend. If that happens, then members would be strongly advised to enter long with a stop just below the lower edge of the channel (give the market a little room to move and allow for overshoots).

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. Only if the base channel is breached by a full daily candlestick below and not touching the lower edge would a bearish wave count be considered.

The gold best fit channel about minor wave 2 is shown on the daily chart today, so that members may see how it is drawn.


Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

Minor wave 2 may be a complete double zigzag. The second zigzag labelled minute wave y is now a complete structure. Within the zigzag, minuette wave (c) no longer exhibits a Fibonacci ratio to minuette wave (a).

Within minuette wave (c), there is good alternation between the expanded flat of subminuette wave ii and the triangle of subminuette wave iv.

If price breaks above the gold best fit channel with clear upwards movement, not sideways, that shall offer some confidence that a low is in place. A new high above 1,268.38 would offer further confidence.

Allow for the possibility that price could continue lower while it remains within the channel.


Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

It is also possible that minor wave 2 is not over and may continue lower.

Within minuette wave (c), there is no longer alternation between the corrections of subminuette waves ii and iv. If subminuette wave iv is continuing further, then it looks like an expanded flat correction. Alternation is a guideline not a rule, so this wave count is possible but the lack of alternation does reduce its probability.

The target about 1,245 would now very closely align with support at the lower edge of the base channel on the daily chart.



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.

Volume for last week suggests the downwards movement is a pullback, and it may still continue further as volume remains fairly heavy.

Gold has made a series of higher highs and higher lows since the low in December 2016, the definition of an upwards trend. Assume the trend remains the same until proven otherwise.

This weekly chart still remains mostly bullish with some neutrality.


Gold Daily 2016
Click chart to enlarge. Chart courtesy of

Support about 1,240 aligns nicely with the Elliott wave target at 1,245 and the lower edge of the base channel on the daily Elliott wave charts. If price does move lower, it looks very likely to end about the 1,245 to 1,240 area.

Price may be finding some support today at the mid term Fibonacci 55 day moving average.

Today’s session completes a doji, which has a very small upper wick; this is a Dragonfly Doji, which is bullish. While doji are useful in calling market tops, they are less useful in calling market bottoms. More confirmation is needed to signal a low.

RSI is today very slightly bullish with some divergence.

ADX, ATR and Bollinger Bands still point to this downwards movement being a pullback within a larger upwards trend.


More adventurous members may like to enter long here for Gold. If entering a long position here, be prepared to have an underwater position for up to about three days. Stops may be set a little below 1,240.

More conservative members may like to wait for the channel on the hourly chart to be breached before entering long.

Always follow my two Golden Rules for risk management.

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 is mixed. Bollinger Bands and ADX indicate a downwards trend with volatility. But ATR, RSI and volume indicates some weakness.

On Balance Volume at support is a strong signal. A new resistance line is added but this does not yet have good technical significance.

It looks like a low for GDX may be either already in or may be very close.


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 @ 06:40 p.m. EST.