Select Page

A small inside day sees the target for one of the two Elliott wave counts adjusted. This new target is now closer to the target for the other Elliott wave count.

Summary: Expect downwards movement now to continue at least for the short term. A short term target is at 1,261.

Use the channels drawn on the hourly charts (they are the same). Expect price to keep falling while it remains within the channel. If that channel is breached by upwards movement, expect a big bounce. The upper edge of the channel may be used to place trailing stops for shorts.

This downwards swing may go as low as 1,170 to 1,158.

Always trade with stops and 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.

The wave counts will be labelled first and second. Classic technical analysis will be used to determine which wave count looks to be more likely.



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

The Magee bear market trend line is removed from all charts today because it has clearly failed. It is no longer showing where price is finding resistance or support, and so it is no longer of any technical significance.

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.


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) must be a five wave structure, either an impulse or an ending diagonal. It is unfolding as the more common impulse.

With the current pullback no longer remaining within a channel drawn about the prior upwards wave, this looks like a new wave separate to the last wave up. Labelling the last wave up and now this pullback at the same degree looks more correct.

It is possible that minor wave 1 may have been over at the last high and the current pullback may be minor wave 2. Minor wave 2 may not move beyond the start of minor wave 1 below 1,205.41.

The target for minor wave 2 is calculated at the hourly chart level. If it is wrong it may not be low enough. A lower target at the 0.618 Fibonacci ratio of minor wave 1 about 1,261 may also be possible.


Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

Minor wave 2 may be unfolding as a single zigzag, which is one of the most common structures for a second wave.

The target is recalculated today. While it is possible that minor wave 2 was over at yesterday’s low, this would see a very shallow and brief second wave correction. It would be better to expect it to be have a more typical look. The target given yesterday is now too close. If only minuette wave (i) within minute wave c is complete, then there would not be enough room for the structure to continue to reach yesterday’s target.

Minor wave 1 lasted 44 days in total. So far minor wave 2 has only lasted 7 days. It should be expected to last longer than this for the wave count to have good proportions.

Price should remain with the Elliott channel while minor wave 2 continues. If this channel is breached by upwards movement, that shall be an early indicator that minor wave 2 may be over.

If this wave count is correct, then when this pullback is complete then a third wave up should unfold.

Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,334.24.



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

With the failure of the Magee bear market trend line (now removed), it is again a reasonable possibility that cycle wave b is continuing sideways as a triangle.

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 is now a problem for this wave count, the upper A-C trend line no longer has such a typical look.


Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

A clear and strong breach below the blue Elliott channel about intermediate wave (Y) indicates that upwards movement should be over and a new wave down should have begun.

This second wave count expects the new wave down may be deeper and longer lasting than the first wave count allows for.

A common length for triangle sub-waves is from 0.8 to 0.85 the length of the prior wave. Primary wave D would reach this range from 1,170 to 1,158.

If primary wave C is correctly labelled as a double zigzag, then primary wave D must be a single zigzag.


Gold Elliott Wave Hourly 2017
Click chart to enlarge.

1-2-3 of an unfolding impulse and a-b-c of a zigzag have exactly the same subdivisions: 5-3-5. Subdivisions of downwards movement are seen in the same way for both hourly wave counts.

Minor wave 3 may reach a common Fibonacci ratio to minor wave 1.

Within minor wave 3, minute wave ii may not move beyond the start of minute wave i above 1,334.24.

The base channel is exactly the same as the Elliott channel on the first wave count. If this second wave count is correct, then along the way down corrections should find resistance about the upper edge of the base channel.

A third wave should have the power to break below a base channel. If price does break below the lower trend line, that shall offer a little confidence in this wave count.



Gold Weekly 2017
Click chart to enlarge. Chart courtesy of

Last weekly candlestick completes as very bearish. It is not engulfing the prior weekly candlestick, but it is even more bearish than that. The week gaps open lower and then closes well below the prior weekly candlestick. Bears dominated last week. They managed to pull price down to new lows substantially below the prior week, closing below the lower wick of the week before.

This candlestick supports the second Elliott wave count.

ADX and On Balance Volume however remain very bullish.


Gold Daily 2016
Click chart to enlarge. Chart courtesy of

Today’s candlestick completes a small doji, which indicates a small pause within a trend and on its own is not a reversal signal. The balance of volume was down and shows a decline. This is inconclusive, for a small range doji, and it looks only like a small pause and not a warning of a change, yet.

Look now for strong support about 1,310 to 1,305.

Volume is still bullish. If volume begins to increase as price falls, then this view could change. But for now volume is declining as price falls. This is typical of a pullback or consolidation within a larger ongoing bull trend.

The pullback has brought RSI and Stochastics down from extreme, but ADX is still not down below the directional lines. ADX still indicates a consolidation or pullback.

With strong support here about 1,305 to 1,310, the doji today is entirely reasonable. If price can break below support here, then the next line of support is about 1,285. Expect price may keep falling until it finds support and Stochastics reaches oversold.

Markets are positively correlated if their correlation co-efficient is reliably above 0.5. Markets are negatively correlated if their correlation co-efficient is reliably below -0.5. Markets which fluctuate between positive and negative, and spend time in the shaded area between 0.5 and -0.5, do not have a reliable correlation.

The correlation co-efficient is added today to illustrate the idea of market correlations, and this one in particular: There is no reliable correlation between Gold spot price and Multi Commodity Exchange of India. Therefore, any analysis of one market cannot be used to indicate price direction of the other.



GDX Daily 2016
Click chart to enlarge. Chart courtesy of

The gap looks to be a measuring gap, and should be assumed to be until it is closed. Measuring gaps are useful in two different ways: they can be used to place stops and they can be used to calculate targets.

A target given using the measuring gap is 22.40.

If the gap is closed, then it is not a measuring gap and the downwards wave may be over, so shorts should be closed. Stops for any short positions may be placed just above the upper edge of the gap now at 24.05.

With the gap offering resistance (if it is a measuring gap) and On Balance Volume offering resistance, this may force price to turn here.

Published @ 06:10 p.m. EST.