Price moved sideways and then higher, which was what was expected from the Elliott wave count.
Summary: A trend change is expected here; price is at very strong resistance. The target for the next wave down is either 1,157 to 1,149, or 1,140 or below.
If the next session prints a full daily candlestick above and not touching the maroon trend line, be prepared to switch quickly from bear to bull and enter long.
Always use a stop. For shorts it may be above the last swing high at 1,294.96. Do not invest more than 1-5% of equity on any one trade.
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 to the high in April 2017 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 labelled minor wave A is 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.
The Magee bear market trend line is added to the weekly charts. This cyan line is drawn from the all time high for Gold on the 6th of September, 2011, to the first major swing high within the following bear market on the 5th of October, 2012. This line should provide strong resistance. If that resistance holds, then the second weekly chart would be correct.
Anchor points for the maroon trend line are now added to this weekly chart. Draw it from the high in early July 2016 to the high in April 2017. This trend line is not too steep, has been tested six times, and is long held. It offers very strong technical significance. It is expected now that upwards movement is very likely to end here as price is now right at this line. Copy it over to daily charts.
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. It may also subdivide as a single zigzag.
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. Primary wave E may not move beyond the end of primary wave C above 1,294.96.
Triangles normally adhere very well to their trend lines. Occasionally, price may overshoot the trend lines but when this happens it is not by much and is quickly reversed. The upper A-C trend line should offer very strong resistance at this stage if cycle wave b is unfolding as a triangle. This trend line is added to the daily chart below.
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 from the high on the 17th of April, 2017, at 1,294.96. (It may also turn out to be a double zigzag. For now a single only will be charted but a double will be kept in mind). 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 at this stage.
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 over here or very soon indeed. If either of the first two weekly wave counts are correct, then tomorrow must see a downwards day. If price breaks above the maroon trend line with a full daily candlestick above and not touching the line, then the fourth weekly chart will become the main wave count.
Minor wave B may not move beyond the start of minor wave A above 1,294.96.
The structure within minor wave B will be labelled as a triangle for minute wave b; this has a very good fit and the best look at the daily chart level. Because the two hourly charts published in last analysis both expected the same movement next, only one will be published today.
2 HOURLY CHART
This two hour chart shows all of minor wave B from the end of minute wave a onwards.
Minute wave b fits perfectly as a running contracting triangle. Minute wave b would reach 0.618 the length of minute wave a at 1,282. Price is almost right at this target. Copy the green Elliott channel over to the hourly chart.
At 1,282 there would be a Fibonacci ratio at two degrees and minuette wave (v) would move just slightly above the end of minuette wave (iii), avoiding a truncation.
A new low now below 1,269.45 could not be a fourth wave correction within minute wave c, as then price would be back in first wave territory. A new low below 1,269.45 would add some confidence in a trend change.
A breach of the lower edge of the green Elliott channel would add further confidence in a trend change.
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.
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.
Prior to price confirmation, reasonable confidence may be had in this wave count if a full daily candlestick is printed above and not touching the maroon trend line.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Last week completes an Advance Block candlestick pattern. This is a three candlestick pattern; three green candlesticks with the second and third candlesticks showing signs of weakening. However, this pattern does not come within a mature upwards trend, so the warning is weak and further weakened by the longer lower wicks on the last two candlesticks, which are bullish.
Declining volume along with declining range is bearish.
Strong divergence between price and On Balance Volume is bearish.
There is still room for price to rise further, but the short lived upwards trend at this time looks weak.
The maroon trend line is added to this weekly chart, using the same anchor points as the Elliott wave charts.
Click chart to enlarge. Chart courtesy of StockCharts.com.
The pennant pattern suggests an upwards breakout (which happened) to be followed by more upwards movement to the target at 1,310.
Monday’s small doji represents a balance between bulls and bears, indecision. With much lighter volume for the session and upwards movement, there was not support from volume during this session. This is bearish. It looks like the bulls are running out of steam.
This does not mean price must turn here. It just means it looks fairly likely.
On Balance Volume is right at resistance. There is a little leeway in exactly how the purple line may be drawn. The purple line needs to be clearly broken for it to be read as a bullish signal. This suggests a red daily candlestick tomorrow is fairly likely.
ADX is extreme; this is usually followed by a trend change fairly quickly for Gold. ATR is flat; the trend lacks range which indicates weakness.
Stochastics may remain overbought for reasonable periods of time and divergence may develop further.
The only bullish signal here is widening Bollinger Bands with the upwards trend.
Click chart to enlarge. Chart courtesy of StockCharts.com.
GDX led the way for the last two turns in price. At the end of last week, it may again be signalling what is to come next.
While Gold had an upwards week, GDX has essentially moved sideways and cannot break out of its flag pattern. Price today again closed within the pattern.
There has not yet been a breakout by On Balance Volume. Again, there is a little leeway in exactly how the purple resistance line may be drawn. It is adjusted very slightly to be as conservative as possible.
GDX is clearly still consolidating. During the consolidation, it is two downwards days which have strongest volume suggesting a downwards breakout is more likely than upwards.
This analysis is published @ 10:37 p.m. EST.