Price continues to move slowly lower as the main wave count expects it to.

Summary: The main wave count expects a trend change to a new bear market to last one to several years, and the target is 470. A new low below 1,324.93 now offers further confidence in this view.

Full confidence may be had in the target if price can make a new low below 1,236.54 in the next few weeks.

An alternate expects overall upwards movement from here. It would be confirmed if price makes a new high reasonably above 1,357.09.

New updates to this analysis are in bold.

Last historic analysis with monthly charts is here. Video is here.

Another alternate monthly chart is here.

Grand SuperCycle analysis is here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

All main wave counts expect that Gold completed a large five down from the all time high in November 2011 to the low of December 2015, which is seen on the left hand side of weekly charts.

If this analysis is correct, then the five down may not be the completion of the correction. Corrective waves do not subdivide as fives; they subdivide as threes. The five down is seen as cycle wave a within Super Cycle wave (a).

Cycle wave b began in December 2015.

It looks unlikely that cycle wave b may have been over at the high labelled primary wave A. Primary wave A lasted less than one year at only 31 weeks. Cycle waves should last one to several years and B waves tend to be more time consuming than other Elliott waves, so this movement would be too brief for cycle wave b.

This wave count looks at cycle wave b to be most likely a regular contracting triangle.

All sub-waves must subdivide as threes within an Elliott wave triangle, and four of the five sub-waves must be zigzags or multiple zigzags, and the most common sub-wave to be a multiple is wave C. Only one sub-wave may be a more complicated multiple. This triangle meets all these rules and guidelines; all subdivisions fit perfectly at all time frames. It is the main wave count for these reasons, and thus is judged to have the highest probability.

The triangle trend lines have a normal looking convergence. Primary wave D now looks fairly likely to be complete, and it looks like an obvious three wave structure at the weekly chart level.

While primary wave E should also most likely look like an obvious three wave structure at the weekly and daily chart levels, it does not have to do this. It is possible that primary wave E could be over, falling reasonably short of the A-C trend line and being relatively quick. E waves of triangles can often be the quickest of all triangle waves.

DAILY CHART

Click chart to enlarge.

This first wave count follows on directly from the weekly chart above. It looks at primary wave E as a single zigzag. Zigzags subdivide 5-3-5.

It is possible that the zigzag for primary wave E may be complete. It looks like a zigzag at the daily chart level. E waves of triangles can be surprisingly quick. A very good example of this is here on this daily chart: the triangle labelled intermediate wave (B) within primary wave D also came to a quicker than expected end.

The target calculated for cycle wave c assumes the most common Fibonacci ratio to cycle wave a.

If primary wave E continues higher, it may not move beyond the end of primary wave C above 1,357.09. A new high by any amount at any time frame would immediately invalidate this wave count.

A new low below 1,236.54 would invalidate weekly alternate wave counts and provide a high level of confidence in this main wave count.

HOURLY CHART

Click chart to enlarge.

A base channel is added to minor waves 1 and 2. Downwards movement has breached the lower edge of the channel, which is now providing resistance.

This wave count still expects to see an increase in downwards momentum as a third wave down at four degrees unfolds.

If subminuette wave ii moves any higher, it may not move beyond the start of subminuette wave i above 1,337.40.

The alternate hourly wave count is invalidated. This adds a little more confidence to this main wave count.

SECOND WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

If cycle wave b is a single zigzag, then the upwards wave labelled here primary wave A must be seen as a five wave structure. But this is problematic because (within primary wave A) intermediate wave (4) lasted 12 weeks whereas intermediate wave (2) only lasted 2 weeks. While disproportion between corrective waves does not violate any Elliott wave rules, it does give a wave count the wrong look.

Gold is typical of commodities in that it often exhibits swift strong fifth waves, leading to blowoff tops in bull markets and selling climaxes in bear markets. This tendency is most often seen in Gold’s third waves. When this happens the strong fifth wave forces the fourth wave correction that comes before it to be more brief and shallow than good proportion to its counterpart second wave would suggest. When this happens the impulse has a curved three wave look to it at higher time frames.

It is acceptable for a wave count for a commodity to see a curved impulse which has a more time consuming second wave correction within it than the fourth wave correction.

The impulse has a more time consuming fourth wave than the second in this case though, giving the wave the look of a zigzag. This is unusual, and so the probability of this wave count is low.

Low probability does not mean no probability, so this wave count is possible; when low probability outcomes do occur, they are never what was expected as most likely.

Primary wave C must subdivide as a five wave structure, either an impulse or an ending diagonal. Because the upwards wave of intermediate wave (1) fits as a zigzag and will not fit as an impulse, an ending diagonal is considered.

Ending diagonals require all sub-waves to subdivide as zigzags.

Within intermediate wave (1), to see this wave as a zigzag, minor wave B is seen as a double flat correction. In my experience double flats are extremely rare structures, even rarer than running flats. The rarity of this structure further reduces the probability of this wave count.

Intermediate wave (3) must move beyond the end of intermediate wave (1) above 1,357.09.

Intermediate wave (3) must subdivide as a zigzag. Within the zigzag, minor wave B may not move beyond the start of minor wave A below 1,236.54.

THIRD WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

Cycle wave a is still seen as a completed five wave structure. This third wave count looks at cycle wave b as a possible double zigzag.

A triangle may be completing as an X wave within a double zigzag for cycle wave b.

Now the upwards wave labelled here primary wave W is seen as a zigzag. This has a better fit than the first alternate.

Within the triangle for primary wave X, intermediate waves (A) through to (C) may be complete. Intermediate wave (D) may also be complete, but there is room for it to still move higher. If the triangle for primary wave X is a regular contracting triangle, then intermediate wave (D) may not move beyond the end of intermediate wave (B) above 1,357.09. If the triangle is a barrier triangle, then intermediate wave (D) should end about the same level as intermediate wave (B), so that the (B)-(D) trend line remains essentially flat. In practice, this means that intermediate wave (D) may end slightly above 1,357.09 and this wave count would remain valid.

This is why a new high reasonably above 1,357.09 only would invalidate this wave count. This invalidation point is not black and white.

The final sub-wave of intermediate wave (E) may have now begun. Intermediate wave (E) may not move beyond the end of intermediate wave (C) below 1,236.54. This invalidation point is black and white. A new low by any amount at any time frame would invalidate this wave count.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

Now that price has again broken above resistance at 1,305 to 1,310, that area may now provide support. Next resistance is about 1,345.

Stochastics is added this week. Price is range bound in a weekly level consolidation. As price swings from resistance to support and back again, Stochastics may be used to assist to see where each swing may end and the next begin. Price is nearing resistance at 1,345 and Stochastics is just entering overbought. It looks reasonable to expect the upwards swing to end soon; there is a little room for price to rise still.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

The doji and light volume for this session are a concern for the bearish wave counts. At this stage, it looks like a correction within an ongoing upwards trend.

There is strong support below about 1,310 – 1,305.

The upwards trend is stretched and very extreme, but it could still continue for longer.

GDX DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

It looks like price may have turned for GDX. Look for price to move lower to support while Stochastics moves lower towards oversold.

Published @ 08:28 p.m. EST.