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Overall sideways movement was expected for the week. So far price has moved a little lower, now finding support almost exactly at a long term trend line.

Summary: The correction for minor wave 4 may be over today. If it moves a little lower, then a target at 1,309 would be the lowest expectation. The correction should find strong support at the cyan trend line on the daily chart.

Look for the next upwards wave to begin here as fairly likely. The target is now 1,380, with a limit at 1,397.51.

Always use a stop. At this time, stops may be set just a little under the cyan trend line about 1,308. Invest only 1-5% of equity on any one trade.

New updates to this analysis are in bold.

Last monthly charts for the main wave count are here, another monthly alternate is here, and video is here.

Grand SuperCycle analysis is here.



Gold Elliott Wave Chart Weekly I 2017
Click chart to enlarge.

There is strong support from classic technical analysis for this wave count. Now that price has fully broken above the Magee trend line and has broken out above a consolidation zone, with support from volume, this wave count will now be the main wave count.

There are more than 23 possible corrective structures that B waves may take, and although cycle wave b still fits well at this stage as a triangle, it may still be another structure. This wave count looks at the possibility that it may be a double zigzag.

If cycle wave b is a double zigzag, then current upwards movement may be part of the second zigzag in the double, labelled primary wave Y.

The target remains the same.

Within intermediate wave (C), no second wave correction may move beyond the start of its first wave below 1,205.41.

There are two problems with this wave count which reduce its probability in terms of Elliott wave:

1. Cycle wave b is a double zigzag, but primary wave X within the double is deep and time consuming. While this is possible, it is much more common for X waves within double zigzags to be brief and shallow.

2. Intermediate wave (B) within the zigzag of primary wave Y is a double flat correction. These are extremely rare, even rarer than running flats. The rarity of this structure must further reduce the probability of this wave count.

Although this wave count still has these problems, technical analysis now points to it being more likely. The alternate will continue to be considered until price invalidates it.


Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

The analysis will focus on the structure of intermediate wave (C). To see details of all the bull movement for this year see daily charts here.

Intermediate wave (C) may be unfolding as an impulse.

Within the impulse, minor waves 1 through to 4 may now be complete.

Minor wave 2 may have ended as a relatively brief shallow second wave. It is unusual for second wave corrections to be this shallow. If my analysis of intermediate wave (C) is wrong, it may be in labelling minor waves 1 and 2 already over. It is possible that only minor wave 1 was over at last week’s high. If price moves below 1,300.54 at this stage, then I would expect a deeper more time consuming correction which would be labeled minor wave 2.

Minor wave 2 was a shallow 0.21 zigzag lasting five days. Minor wave 4 may be complete as a 0.47 zigzag lasting three days. There is some alternation in depth and little alternation in structure. Within the two zigzags, minute wave b within minor wave 2 is time consuming and minute wave b within minor wave 4 is quicker. This gives each correction a different look overall providing a little alternation.

It is also possible to move the degree of labelling within minor wave 4 down one degree; the zigzag may be only minute wave a of a triangle or flat correction for minor wave 4. Minor wave 4 may continue sideways for a few more days.

Minor wave 4 may not move into minor wave 1 price territory below 1,300.54.

Minor wave 4 should find very strong support at the cyan Magee trend line now if price gets down there. This would be a very typical curve down to back test support at prior resistance.

Fourth waves are often but not always contained within a channel drawn about the impulse using Elliott’s first technique. That is why Elliott developed a second technique to redraw the channel when a fourth wave breached it. The channel is redrawn today using the second technique: the first trend line is drawn from the ends of minor waves 2 to 4, then a parallel copy is placed upon the end of minor wave 3. If minor wave 4 continues any further, then the channel must again be redrawn.


Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

The proportions between minor waves 2 and 4 look reasonable at the daily chart level. It looks like minor wave 4 is a quicker sharper pullback where a sideways choppy consolidation was expected.

Price is now very close to the cyan trend line on the daily chart, so it looks like a typical curve down to back test support (that trend line should offer strong support). This indicates the correction may be over here or very soon indeed.

The small pink channel about minor wave 4 should be used as an indication of when it may be over. A breach of the channel would add some confidence. A new high above the start of minute wave c at 1,334.56 would add further confidence; at that stage, upwards movement could not be a second wave correction within minute wave c and at that stage minute wave c would have to be over.

It is also possible to move the degree of labelling within the zigzag labelled minor wave 4 all down one degree; this may only be minute wave a of a flat correction or a triangle. Both a flat and a triangle would expect mostly sideways movement, and an upwards swing here for the short term. If the next wave up shows any signs of weakness, then it may be a B wave and then an alternate wave count would be considered.



Gold Elliott Wave Chart Weekly I 2017
Click chart to enlarge.

The Magee trend line is now breached by a full weekly candlestick above and not touching the line. This substantially reduces the probability of this wave count.

The Magee bear market trend 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.

To use this trend line in the way Magee describes, we should assume that price will find resistance at the line if it gets back up there. Now that the line is breached, it is signalling a major trend change from bear to bull.

Within a triangle, one sub-wave should be a more complicated multiple, which may be primary wave C. This is the most common sub-wave of the triangle to subdivide into a multiple.

Intermediate wave (Y) now looks like a complete zigzag at the weekly chart level.

Primary wave D of a contracting triangle may not move beyond the end of primary wave B below 1,123.08. Contracting triangles are the most common variety.

Primary wave D of a barrier triangle should end about the same level as primary wave B at 1,123.08, so that the B-D trend line remains essentially flat. This involves some subjectivity; price may move slightly below 1,123.08 and the triangle wave count may remain valid. This is the only Elliott wave rule which is not black and white.

Finally, primary wave E of a contracting or barrier triangle may not move beyond the end of primary wave C above 1,295.65. Primary wave E would most likely fall short of the A-C trend line. But if it does not end there, then it can slightly overshoot that trend line.

Primary wave A lasted 31 weeks, primary wave B lasted 23 weeks, and primary wave C started its 38th week. A double zigzag may be expected to be longer lasting than single zigzags within a triangle, and so this continuation of primary wave C is entirely acceptable and leaves the wave count with the right look at this time frame.

With upwards movement continuing, the A-C trend line now has too weak a slope. At this stage, this wave count now looks less likely.


Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

The cyan Magee trend line has now been breached. This must reduce the probability of this wave count.

A breach of the blue Elliott channel by downwards movement would indicate a trend change.

The structure of minor wave C may now be complete.


Gold Elliott Wave Hourly 2017
Click chart to enlarge.

1-2-3 of an unfolding impulse subdivides 5-3-5, exactly the same as A-B-C of a zigzag. The subdivisions at the hourly chart level for this alternate are now seen in exactly the same way as the subdivisions for the main hourly chart.

It is slightly unusual for the first second wave correction within a new trend to be shallow; most often they are very deep. It is entirely possible that minor wave 2 may not be over and may continue higher as a flat correction or a double zigzag.

Minor wave 2 may not move beyond the start of minor wave 1 above 1,357.09.



Gold Weekly 2017
Click chart to enlarge. Chart courtesy of

Overall, this chart is bullish. This trend may be expected to continue at least until weekly RSI reaches overbought.

A small pullback here within the upwards trend may pull RSI a little lower allowing more room for upwards movement to continue.


Gold Daily 2016
Click chart to enlarge. Chart courtesy of

An Evening Star candlestick pattern indicates a trend change from up to either down or sideways. Candlestick reversal patterns do not necessarily mean a switch from up to down or down to up, they may also indicate a switch to sideways. This offers some support to the Elliott wave count.

Volume continues declining as price falls. Pullbacks and consolidations most typically come with lighter volume. Only should this view change if downwards movement continues and has support from volume. At this point, the data available indicates a consolidation.

The pullback may find support here at the short term Fibonacci 13 day moving average.



GDX Daily 2016
Click chart to enlarge. Chart courtesy of

On Balance Volume is again right at support.

Price is very close to the Fibonacci 13 day moving average, which is about where it normally finds support for short term pullbacks.

The correction may end soon.

Some increase in volume for a downwards day and no long lower wick on a strong red daily candlestick does suggest a little more downwards movement to come for the short term.


Gold Daily 2016
Click chart to enlarge. Chart courtesy of

This section will be left at the end of analysis until either the current wave count is proven wrong, or the third wave we are expecting has completed.

This chart has been published before. It shows the most recent example of a strong third wave in Gold from December 2015 to March 2016.

Note that during this strong upwards trend:

– RSI first reached overbought on the 4th of February and price then continued strongly higher for five more days culminating in a blowoff top on the 11th of February.

– RSI and Stochastics remained extreme for most of the second half of the trend. At the final high, they both exhibited strong divergence with price.

– Price found support at the short term Fibonacci 13 day moving average during the entire trend.

– All signals from On Balance Volume were bullish right up to the end of the trend. The 9th of March shows the first bearish signal, which was an important warning of a trend change.

– The trend begins with choppy overlapping and some hesitancy.

– The 6th of January was an important upwards breakout from resistance, with support from volume. Thereafter, price moved more strongly.

– While overall volume supported the upwards movement in price, this was not linear. Some weaker days occurred yet price continued higher. It is the overall trend of volume which is more important than any one or two days. On Balance Volume remaining bullish was an important guide.

No two waves are the same. So if the current wave count is correct, it may be different from this example. However, there are some important lessons to be learned here:

1. On Balance Volume is an important guide. Bullish signals should be taken seriously, particularly early on in the trend. Later in the trend, with RSI and Stochastics overbought, any bearish signal from On Balance Volume should see long positions closed.

2. RSI and Stochastics can reach extreme overbought. Only when they have been extreme for some time and then exhibit strong divergence should it be taken as a warning of a trend change.

Published @ 08:10 p.m. EST.