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Downwards movement at the end of Friday’s session still remains within the consolidation zone that began back in late September.

Summary: While an upwards swing within a small consolidation zone is still expected as most likely here to about 1,308, it is possible that the lows of the consolidation may be tested once more before price starts to move higher with any conviction. The first target for another test of lows would be about 1,266, but it could be as low as about 1,246 although this looks less likely.

Only the most experienced of traders should be trading the small swings within a consolidation. If trading the small swings, reduce risk to 1-3% of equity for any one trade and always trade with stops.

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. In terms of Elliott wave structure the second wave count has a better fit and fewer problems.



Gold Elliott Wave Chart Weekly I 2017
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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. However, prior to invalidation, this wave count may be discarded if price breaks below the lower edge of the black Elliott channel. If this wave count is correct, then intermediate wave (C) should not break below the Elliott channel which contains the zigzag of primary wave Y upwards.

There are now three 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.

3. Although intermediate wave (C) should be continuing so that primary wave Y ends substantially above the end of primary wave W, the duration and depth of minor wave 2 within it now looks to be too large at the weekly time frame.


Gold Elliott Wave Chart Daily 2017
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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 invalidation of the short term hourly chart at the end of Friday’s session and recent weakness in upwards movement, the analysis is changed for this first wave count for the short term to see minor wave 2 as not yet over.

Minor wave 2 will subdivide as an incomplete single zigzag. If this wave count is correct, then it should find very strong support about the lower edge of the black Elliott channel, which contains the upwards zigzag of primary wave Y and is copied over here from the weekly chart.

An Elliott channel is drawn about this possible zigzag for minor wave 2 downwards in pink. While price remains within this channel, then it will remain possible that minor wave 2 is incomplete. When price breaks above the upper edge of this channel, then it would signal an end to minor wave 2 and the start of minor wave 3 upwards.

Minor wave 2 may not move beyond the start of minor wave 1 below 1,205.41.

The subdivisions of minor wave 2 zigzag are shown on the daily chart. They have been checked on the hourly chart and will all fit.


Gold Elliott Wave Chart Hourly 2017
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Within the zigzag of minor wave 2, minute wave c must complete as a five wave structure. It may be a simple impulse.

Within the impulse, minuette wave (iii) must move beyond the end of minuette wave (i). The following correction for minuette wave (iv) must unfold and remain below minuette wave (i) price territory. This wave count expects a few more days of slowing downwards movement.

Minor wave 1 lasted 44 days. So far minor wave 2 has lasted 40 days. It may continue for another 4 if it is to be even in duration with minor wave 1.



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

It is still possible that cycle wave b is unfolding as a regular contracting or barrier 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 lasted 38 weeks.

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.

Within primary wave D, no part of the zigzag may move beyond its start above 1,357.09.


Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

The idea of a zigzag continuing lower for minor wave B will work in exactly the same way for this second wave count as it does for the first, as per labelling on the first daily chart. This second wave count will continue to look at the possibility that minor wave B was over and minor wave C is now beginning.

At this stage intermediate wave (B) looks incomplete.

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.

Within the single zigzag of primary wave D, intermediate wave (A) is labelled as a complete impulse.

Intermediate wave (A) lasted twenty days, just one short of a Fibonacci twenty-one. Intermediate wave (B) may be about the same duration, so that this wave count has good proportions, or it may be longer because B waves tend to be more complicated and time consuming.

So far intermediate wave (B) has lasted twenty sessions, it is incomplete and needs several more sessions now to complete. The next Fibonacci ratio in the sequence is thirty four.

At its conclusion intermediate wave (B) should have an obvious three wave look to it here on the daily chart. While it is labelled as a flat correction, it may also complete as a combination or triangle. Labelling for this second wave count within intermediate wave (B) may change here on the daily chart and at the hourly chart level as the structure continues and becomes clearer.


Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

Intermediate wave (B) may be a regular flat correction. It may also be a combination or triangle, so labelling within this structure for this wave count my still change in coming days.

Within intermediate wave (B), minor wave B has passed the minimum requirement of 0.90 the length of minor wave A. B waves within 0.90 to 1.05 the length of A waves indicate a regular flat correction. The most common length for C waves within regular flats is equality in length with the A wave.

Minor wave C would be extremely likely to make at least a slight new high above the end of minor wave A at 1,305.72 to avoid a truncation if intermediate wave (B) is a flat correction. If intermediate wave (B) is a triangle, then minor wave C may not move beyond the end of minor wave A above 1,305.72 (it must end before this point).

Both wave counts require a five wave structure upwards to complete. For this second wave count it would be labelled minor wave C.

So far, within minor wave C, after Friday’s invalidation of the short term labelling downwards movement may be a continuation of minute wave ii as an expanded flat correction. Minute wave ii may not move beyond the start of minuette wave i below 1,262.50.



Gold Weekly 2017
Click chart to enlarge. Chart courtesy of

Although price made a higher high and higher low this week, the definition of upwards movement, the candlestick has closed red and the balance of volume for the week is downwards. Some increase in volume supports downwards movement during the week, so this is interpreted as bearish.

ATR continues to decline, which offers fairly strong support to the second Elliott wave count. This is exactly the kind of price behaviour expected from large triangles.


Gold Daily 2016
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Price is very clearly consolidating. Expect swings from support to resistance and back again. Use Stochastics in conjunction with support and resistance to signal when each swing ends. Be aware that trading a consolidating market is much more risky than trading a trending market, and reduce risk accordingly. Only experienced traders should consider trading the swings within a consolidation. Reduce risk to 1-3% of equity. Always trade with stops. Here, move stops to a little below support and above resistance to allow for overshoots; give the market room to move.

With Stochastics very close to oversold and price at support, an upwards swing may begin here or very soon. Look for resistance about 1,305 – 1,310. This also supports the second Elliott wave count.

For the very short term, downwards movement during Friday’s session does not have good support from volume although volume did remain reasonably heavy (compared to the last few sessions). For the short term, support may again be tested here about 1,260 before the expected upwards swing begins more clearly.


Gold Daily 2016
Click chart to enlarge. Chart courtesy of

With a new low on Friday from price, GDX is now exhibiting some weakness in this downwards movement.

Because Stochastics is oversold and now exhibits weakness, look out for a bounce back upwards from here. If that happens, then the consolidation zone for GDX may have to be widened to include this recent break below support.

Published @ 10:21 p.m. EST.