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Price remains range bound. Volume analysis is used to indicate the most likely breakout direction.

Summary: A small Elliott wave triangle looks like it may be complete for Gold. A downwards breakout is expected to be underway. Further confidence in this may be had if price closes below support about 1,190. The target will be below 1,147.34, and may be as low as 1,121.

A new high above 1,212.06 would invalidate the triangle and indicate an upwards breakout. If that happens, then look for a strong sustained bounce to end about 1,305 – 1,310.

A downwards swing for GDX may continue within a mid term consolidation. Strong resistance remains about 19.74.

New updates to this analysis are in bold.

Grand SuperCycle analysis is here.

Last historic analysis with monthly charts is here.

Weekly charts were last reviewed here, with video here.



Gold Elliott Wave Chart Weekly 2018
Click chart to enlarge.

There are four remaining weekly wave counts at this time for cycle wave b: a triangle, flat, combination or double zigzag.

All four weekly wave counts were again considered at the end of last week. Only two shall be followed on a daily basis.

At this stage, this wave count may have a slightly higher probability than the other three weekly wave counts because it has more support from classic technical analysis.

If cycle wave b is a combination, then the first structure in a double may be a complete zigzag labelled primary wave W.

The double may be joined by a three in the opposite direction, a zigzag labelled primary wave X.

The second structure in the double may be a flat correction labelled primary wave Y. My research on Gold so far has found that the most common two structures in a double combination are one zigzag and one flat correction. I have found only one instance where a triangle unfolded for wave Y. The most likely structure for wave Y would be a flat correction by a very wide margin, so that is what this wave count shall expect.

Within a flat correction for primary wave Y, the current downwards wave of intermediate wave (B) may be a single or multiple zigzag; for now it shall be labelled as a single. Intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 1,147.34. Intermediate wave (B) may move beyond the start of intermediate wave (A) as in an expanded flat.

Because the minimum requirement for intermediate wave (B) is not yet met, this wave count requires that minute wave v of minor wave C of intermediate wave (B) continues lower. This is the most immediately bearish of all four weekly wave counts.

When intermediate wave (B) is complete, then intermediate wave (C) would be expected to make at least a slight new high above the end of intermediate wave (A) at 1,365.68 to avoid a truncation. Primary wave Y would be most likely to end about the same level as primary wave W at 1,374.91, so that the whole structure takes up time and moves price sideways, as that is the purpose of double combinations.

While double combinations are very common, triples are extremely rare. I have found no examples of triple combinations for Gold at daily chart time frames or higher back to 1976. When the second structure in a double is complete, then it is extremely likely (almost certain) that the whole correction is over.


Gold Elliott Wave Chart Daily 2018
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Intermediate wave (B) may be unfolding lower as either a single or double zigzag. At this stage, a single zigzag will be considered; the expected direction nor minimum requirement at 1,147.34 do not differ from a double zigzag.

If intermediate wave (B) is unfolding as a single zigzag, then within it minor wave C must subdivide as a five wave impulse.

Minute wave iv may again be a complete regular contracting triangle, although this may still morph into a double combination. A target is again calculated for minute wave v.

Gold often exhibits surprisingly swift and short fifth waves out of its fourth wave triangles. If the target is wrong, then it may be too low.


Gold Elliott Wave Chart Hourly 2018
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If the triangle is complete, then a five down should develop on the hourly chart. This is labelled minuette wave (i) and at this time would be incomplete.

Within minuette wave (i), subminuette waves i, ii and iii may be complete. Subminuette wave iv may not move into subminuette wave i price territory above 1,198.25.

Price remains within the triangle trend lines. If this wave count is correct, then when price has broken below support at the lower triangle trend line then downwards momentum may show a strong increase.


Gold Elliott Wave Chart Weekly 2018
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The triangle so far has the best fit and look, but at this stage it no longer has good support from classic technical analysis. It is now judged to have a slightly lower probability than the combination wave count.

Cycle wave b may be an incomplete triangle. The triangle may be a contracting or barrier triangle, with a contracting triangle looking much more likely because the A-C trend line does not have a strong slope. A contracting triangle could see the B-D trend line have a stronger slope, so that the triangle trend lines converge at a reasonable rate. A barrier triangle would have a B-D trend line that would be essentially flat, and the triangle trend lines would barely converge.

Within a contracting triangle, primary wave D may not move beyond the end of primary wave B below 1,123.08. Within a barrier triangle, primary wave D may end about the same level as primary wave B at 1,123.08, so that the B-D trend line is essentially flat. Only a new low reasonably below 1,123.08 would invalidate the triangle.

Within both a contracting and barrier triangle, primary wave E may not move beyond the end of primary wave C above 1,365.68.

Four of the five sub-waves of a triangle must be zigzags, with only one sub-wave allowed to be a multiple zigzag. Primary wave C is the most common sub-wave to subdivide as a multiple, and this is how primary wave C for this example fits best.

Primary wave D must be a single structure, most likely a zigzag.

There are no problems in terms of subdivisions or rare structures for this wave count. It has an excellent fit and so far a typical look.

A channel is drawn on all charts about the downwards wave of primary wave D. Here, it is labelled a best fit channel. If this channel is breached by upwards movement, that may provide reasonable confidence in this weekly triangle wave count and the double zigzag count, and put serious doubt on the combination and flat wave counts.

After a slight new low, this wave count expects a consolidation for primary wave E to back test resistance at prior support, and then a significant new downwards wave for cycle wave C. For the long term, this is the most bearish wave count.


Gold Elliott Wave Chart Daily 2018
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Intermediate wave (C) may be almost complete. The triangle for minor wave 4 may have ended on Friday. Early next week may see minor wave 5 complete. A target is calculated for minor wave 5 to end that expects it to exhibit a Fibonacci ratio to minor wave 1, and would still see the B-D trend line of the triangle for cycle wave b have a reasonable slope.

Gold often exhibits surprisingly short and brief fifth waves out of its fourth wave triangles. This wave count expects this tendency. Minor wave 5 would most likely end at least slightly below the end of minor wave 3 at 1,160.75 to avoid a truncation. The target expects it to end only a little below this point.


Gold Elliott Wave Chart Daily 2018
Click chart to enlarge.

Primary wave D may be complete.

Earliest confidence may come with a new high above 1,212.60. The confidence point remains the same today to allow for alternate ways to label the triangle on the main wave count and so to be a reasonable indicator of a breakout.

If price moves above 1,212.60, with strength and support from volume, then this alternate wave count would be indicated as most likely.

For strong confidence, this wave count now requires a breach of the upper edge of the blue best fit channel. This channel is drawn the same way on all weekly and daily charts, all on a semi-log scale.

Minor wave 1 may have been over on the 22nd of August.

Minor wave 2 may be an incomplete expanded flat correction. Within the expanded flat, at its end minute wave b must retrace a minimum 0.9 length of minute wave a. The triangle for minute wave b must end at 1,199.36 or above; so far it has met this minimum requirement.

Minute wave b may again be complete at a 1.1 length of minute wave a. A short five wave structure downwards for minute wave c would be extremely likely to end below the end of minute wave a at 1,183.36 to avoid a truncation and a very rare running flat.

Minor wave 2 may not move beyond the start of minor wave 1 below 1,160.75.

A target for primary wave E is the strong zone of resistance about 1,305 to 1,310. Primary wave E is most likely to subdivide as a zigzag (although it may also subdivide as a triangle to create a rare nine wave triangle), and it should last at least a Fibonacci 13 weeks. Primary wave E may not move beyond the end of primary wave C above 1,365.68.

This wave count looks at the possibility that a short false downwards breakout may occur out of the triangle and then be followed by a deep time consuming bounce.



Gold Weekly 2018
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On Balance Volume is lower than its prior point at the end of November 2015. This divergence is extremely bearish but does not rule out a consolidation unfolding here; the divergence does strongly support the Triangle wave count, which expects a consolidation or bounce up to test resistance now and then a continuation of a major bear market. It could also support the flat wave count that allows for a new low below 1,046.27 in coming months.

On Balance Volume has made another new low, but price has not. There is now double bearish divergence between price and On Balance Volume.

When Gold has a strong trend, ADX may remain very extreme for long periods of time and RSI can move more deeply into oversold. However, most recent lows since November 2015 were all found when RSI just reached oversold, so some caution here in looking out for a possible consolidation or trend change would be reasonable.

Last week completes an inside week with the balance of volume upwards. Upwards movement within the week no longer has support from volume.

If price does continue lower, then look for next support about 1,140.


Gold Daily 2018
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Gold is now range bound. Resistance and support are identified on the chart. It is a downwards day that has strongest volume during this small range bound movement so far, suggesting a downwards breakout may be more likely than upwards. This technique does not always work, but it does work more often than it fails.

The volume profile remains fairly bearish.

On Balance Volume remains range bound, and the trend lines are converging. On Balance Volume will give a signal; if it does so prior to price breaking out, then a direction would be indicated.

From Kirkpatrick and Dhalquist regarding ascending triangles:

“Upwards breakouts occur 77% of the time, and all breakouts usually happen roughly 61% of the distance (time) from the base to the cradle.”

In this case, 61% of the distance from base to cradle was four sessions ago, which did not see a breakout.

The support line on On Balance Volume has now been tested six times, is reasonably long held, and is close to horizontal. This line now has strong technical significance. The resistance line has a slightly stronger slope, is tested only about three or four times, and is a little longer held. The resistance line has reasonable technical significance, less than the support line.


GDX Weekly 2018
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After a breakout, a technical principle is the longer that price consolidates sideways the longer the resulting trend may be expected to be. Also, the longer that price meanders sideways the more energy may be released after a breakout. This is what is happening now for GDX.

A target for this downwards trend to end calculated using the measured rule is at 16.02. That is not yet met.

At the weekly chart level, there is a clear downwards breakout with a breakaway gap. As breakaway gaps should not be closed, they may be used to set stops that may be set just above a downwards breakaway gap.

The bullish divergence between price and On Balance Volume noted with green trend lines is also not a strong signal. On Balance Volume is a leading indicator; when it leads, it offers a signal, but it does not always lead price.

There is short term bullish divergence between price and Stochastics. A consolidation may develop here to relieve extreme conditions. The small bounce of the last two weeks has not yet lasted long enough to relieve extreme conditions, so it may continue either higher or sideways.


GDX Daily 2018
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At least for the short term expect upwards movement to end here. A consolidation may continue to relieve oversold conditions; price may now swing downwards towards support.

Strong support from volume today for downwards movement indicates the downwards swing is most likely to continue.

Published @ 10:06 p.m. EST.

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