More downwards movement was expected as possible, but a close below support is more bearish than expected.

Summary: Friday completes a classic downwards breakout below support. Look for next support about 1,185. Have confidence in a downwards trend if price makes a new low by any amount at any time frame below 1,201.14. This week classic analysis now favours the Combination wave count.

However, it is possible that price may bounce up from here while it remains above 1,201.14. The short-term target would be at 1,247, where another multi week consolidation may begin.

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

Click chart to enlarge.

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 E should now be underway for this wave count.

Primary wave E should subdivide as a zigzag. Intermediate wave (A) should subdivide as a five wave structure.

Within intermediate wave (A), so far minor waves 1 through to 3 may now be complete. Minor wave 3 exhibits no Fibonacci ratio to minor wave 1. Minor wave 2 was a relatively shallow 0.497 flat correction.

Minor wave 4 may now be a completed and relatively deep 0.55 flat correction. There is some alternation in depth with minor wave 2 but no alternation in structure.

Minor wave 4 may have ended about support at the lower edge of the Elliott channel.

Minor wave 4 may not move into minor wave 1 price territory below 1,201.14.

Minor wave 2 lasted 27 sessions. Minor wave 4 may have ended in a Fibonacci 13 sessions. This gives reasonable proportion to minor wave 2.

Draw the channel about intermediate wave (A) using Elliott’s first technique. Draw the first trend line from the ends of minor waves 1 to 3, then place a parallel copy on the end of minor wave 2.

A target is calculated for minor wave 5, which expects it to exhibit the most common ratio to minor wave 1.

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 11 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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This hourly chart focusses on the end of minute wave c of minor wave 4. Minute wave c may need one small final new low to begin the next week before it is complete.

This impulse has a curved look, which is typical for Gold. Gold often exhibits more time consuming second wave corrections and quick fourth wave corrections.

Downwards movement at the end of Friday’s session has bounced up exactly at the lower edge of the Elliott channel. If this hourly chart is wrong, it may be in expecting one more final low.

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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Minor wave X may again be complete.

Minor wave Y may be underway for this wave count to continue lower to a minimum at 1,147.34. Minor wave Y may last a few weeks.

This wave count requires a new low below 1,201.14 for confidence. If that happens on Monday, then expect a downwards trend to continue to at least 1,147.34.

HOURLY CHART – COMBINATION

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After strong downwards movement on Friday, this wave count now has a more normal look.

Minor wave Y should unfold as a zigzag. Within the zigzag, minute wave a must unfold as a five wave structure. Minute wave a may be an incomplete impulse, which may have moved through its middle on Friday.

If this wave count is correct, then either of subminuette wave iii or minuette wave (iii) may end with a further increase in downwards momentum. Gold, typical of commodities, often exhibits swift strong fifth waves. This tendency is especially prevalent in fifth waves to end third wave impulses one degree higher.

If this wave count increases in probability with a new low below 1,201.14 next week, then look out for possible selling climaxes.

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 ten weeks.

TECHNICAL ANALYSIS

WEEKLY CHART

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

On Balance Volume has made a lower low than its prior low 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 Hanging Man reversal pattern of last week now has bearish confirmation. This week completes a strong Bearish Engulfing candlestick pattern.

It looks like the bounce may be over. This weekly chart supports the Combination Elliott wave count.

DAILY CHART

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

Price has closed below support, which was at 1,215, on a downwards day that has support from volume. Downwards breakouts do not require support from volume for confidence, but when volume does support them increased confidence may be had.

RSI and Stochastics indicate there is room for price to fall further. Look for next support about 1,185.

This chart also supports the Combination Elliott wave count.

GDX WEEKLY CHART

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

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 to the high now looks like a completed back test of resistance close to prior support at 20.80. The Evening doji star pattern indicates the bounce may be complete. The high last week at 20.51 is exactly the upper edge of the breakaway gap.

It would now be typical to see price move down and away. The target is at 16.02.

GDX DAILY CHART

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

Consider the bounce back up towards resistance at 20.80 now most likely complete.

Published @ 04:03 p.m. EST on November 10, 2018.

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