Sideways movement was expected to continue. A small range downwards day remains between identified support and resistance. This fits expectations.

Summary: A small Elliott wave triangle or classic pennant pattern may be completing. Look out for an upwards breakout to a target at either 1,246 – 1,247 (Elliott wave) or 1,281 (classic analysis).

The final target for this bounce to end is at strong resistance about 1,305 – 1,310.

New updates to this analysis are in bold.

Grand SuperCycle analysis is here.

Last historic analysis with monthly charts is here.

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

At this stage, they will now be presented roughly in order of probability. The triangle and the double zigzag wave counts have about an even probability; the combination and flat wave counts now look less likely.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART – TRIANGLE

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Cycle wave b may be an incomplete regular contracting triangle. Primary wave E may not move beyond the end of primary wave C above 1,365.68. Within primary wave E, intermediate wave B may not move beyond the start of intermediate wave A below 1,160.75.

Four of the five sub-waves of a triangle must be zigzags, with only one sub-wave allowed to be a multiple zigzag. 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 E would most likely be a single zigzag. It is also possible that it may subdivide as a triangle to create a rare nine wave triangle.

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.

Primary wave E may now continue higher as a large three wave structure.

DAILY CHART – TRIANGLE

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Primary wave D may be complete.

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

Minor wave 2 may be a complete expanded flat correction.

Minor wave 3 may only subdivide as an impulse. So far that would be incomplete. A target is calculated for minor wave 3 to end using the most common Fibonacci ratio to minor wave 1. The next target would be about 1,287 where minor wave 3 would reach 2.618 the length of minor wave 1. This second target is reasonably close to a classic technical analysis target at 1,281.

Within minor wave 3, minute wave iii is 1.88 short of 1.618 the length of minute wave i. If minute wave v reaches equality in length with minute wave i, then this impulse would exhibit textbook perfect Fibonacci ratios; this is something that Gold does sometimes do, so this is a reasonable expectation.

There may be perfect alternation within the impulse of minor wave 3, between a deep zigzag of minute wave ii and now a complete shallow triangle of minute wave iv.

Draw an Elliott channel about minor wave 3. Draw the first trend line from the ends of minute waves i to iii, then place a parallel copy on the low of minute wave ii. Minute wave v may end about the upper edge of this channel. If minute wave v exhibits typical commodity like behaviour, then it may be very strong and may end with a strong overshoot of the i-iii trend line.

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. It may also last a total Fibonacci 21 or 34 weeks. So far it has lasted only 8 weeks. Primary wave E may not move beyond the end of primary wave C above 1,365.68.

HOURLY CHART – TRIANGLE

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Minor wave 3 may only subdivide as an impulse.

Within the impulse, minute waves i, ii and now iii may be complete.

Minute wave ii was a very deep 0.89 zigzag. Minute wave iv may last about one to a very few days and exhibit alternation as a shallow flat, triangle or combination.

Minute wave iv is today relabelled as a possibly complete running contracting triangle. This has a good fit and follows a common pattern. Within the triangle, minuette wave (c) fits best as a double zigzag, which is the most common sub-wave of a triangle to subdivide as a more complicated multiple. However, minuette wave (d) would also be best labelled as a double zigzag.

The target is now calculated at two degrees using the most common Fibonacci ratios for minor wave 3 and minute wave v. It has a reasonable probability.

Minute wave iv may not move into minute wave i price territory below 1,207.78.

Gold has a tendency, typical of commodities, to exhibit very swift and strong fifth waves. This tendency is especially prevalent for fifth waves to end third wave impulses. Look out for the possibility of minute wave v to end minor wave 3 to be very swift and strong; it may end with another blowoff top.

WEEKLY CHART – DOUBLE ZIGZAG

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It is also possible that cycle wave b may be a double zigzag or a double combination.

The first zigzag in the double is labelled primary wave W. This has a good fit.

The double may be joined by a corrective structure in the opposite direction, a triangle labelled primary wave X. The triangle would be about three quarters complete.

Within the triangle of primary wave X, intermediate wave (C) should be complete. Within intermediate wave (D), minor wave B may not move beyond the start of minor wave A below 1,160.75.

Intermediate wave (D) would most likely subdivide as a single zigzag. The subdivisions at the daily and hourly chart level for this wave count would be the same as for the first triangle wave count above; a zigzag unfolding higher would be labelled A-B-C.

This wave count may now expect choppy overlapping movement in an ever decreasing range for several more months.

Primary wave Y would most likely be a zigzag because primary wave X would be shallow; double zigzags normally have relatively shallow X waves.

Primary wave Y may also be a flat correction if cycle wave b is a double combination, but combinations normally have deep X waves. This would be less likely.

This wave count has good proportions and no problems in terms of subdivisions.

WEEKLY CHART – COMBINATION

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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 double zigzag. 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 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.

DAILY CHART – COMBINATION

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Intermediate wave (B) may be unfolding lower as a double zigzag.

The first zigzag may be complete, labeled minor wave W. The double may now be joined by an incomplete three in the opposite direction, a zigzag labelled minor wave X. X waves within double zigzags are usually fairly shallow and often also reasonably brief. Minor wave X may end fairly soon.

Minute wave c within minor wave X is today relabelled as an incomplete impulse. Within the impulse, minuette wave (iv) is labelled as a triangle, which may be complete. The short term structure, target and expected direction for this wave count do not diverge from the first triangle daily wave count published above, so only one hourly chart is used today.

WEEKLY CHART – FLAT

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It is possible that cycle wave b may be a flat correction. Within a flat correction, primary wave B must retrace a minimum 0.9 length of primary wave A at 1,079.13 or below. Primary wave B may make a new low below the start of primary wave A at 1,046.27 as in an expanded flat correction.

Only a new low reasonably below 1,123.08 would provide reasonable confidence in this wave count.

Intermediate wave (C) must subdivide as a five wave structure; it may be unfolding as an impulse. Within intermediate wave (C), minor waves 1 through to 4 may be complete. If it continues further, then minor wave 4 may not move into minor wave 1 price territory above 1,307.09.

The blue channel is drawn using Elliott’s second technique. Minor wave 5 may end at support about the lower edge of this channel.

Minor wave 2 was a double zigzag lasting nine weeks. Minor wave 4 exhibits little alternation as a single zigzag and reasonable proportion lasting nine weeks.

TECHNICAL ANALYSIS

WEEKLY CHART

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

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.

The short term volume profile and the long upper candlestick are bearish this week. Some downwards or sideways movement next week looks most likely.

DAILY CHART

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

With strong support from volume, last week saw an upwards breakout above resistance at 1,220.

A small pennant pattern may be forming. Using the flag pole, a target is calculated about 1,281. Pennants are reliable continuation patterns. An upwards breakout is expected.

GDX WEEKLY CHART

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GDX had a large consolidation that lasted from January 2017 to August 2018. A downwards breakout below support at 20.80 in early August 2018 is highly significant. The breakout had support from volume, which adds confidence.

Upwards movement of the last five weeks would most likely be a bounce to backtest resistance at 20.80. If price does reach up to this point, then the probability of a quick turn there and a strong downwards trend is highly likely.

A technical principle is the longer price consolidates, the longer and stronger the resulting trend may be. The downwards trend developing here may last over a year.

A target for the eventual low is about 16.02.

The doji last week puts the short term upwards bounce from bullish to neutral.

GDX DAILY CHART

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

It now looks like GDX may be curving back up to test very strong resistance about 20.80. If it does get up to this point, then that may offer a very good entry point for a short position which may be held for a reasonably long term.

A small flag may be forming. These are reliable continuation patterns. A target using the flag pole may be about 22.55. This target may be too high though, because there is extremely strong resistance above at 20.80.

Published @ 10:15 p.m. EST.

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