For the short term, a small pullback was expected to continue. This is exactly what is happening.

Summary: For the very short term, a small pullback to about 1,235 may continue, lasting about another 4 days. Support below is at 1,245, 1,240 and 1,235.

Thereafter, the upwards trend may resume. The mid-term target remains the same at 1,295.

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

For GDX, yesterday’s high may be a major high. GDX may now move lower towards 16.02.

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 time, the Triangle wave count may again be slightly more 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 waves (A) and (B) may be complete. Intermediate wave (C) must subdivide as a five wave structure. Within intermediate wave (C), minor wave 2 may not move beyond the start of minor wave 1 below 1,181.06.

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.

When primary wave E is a complete three wave structure, then this wave count would expect a cycle degree trend change. Cycle wave c would most likely make new lows below the end of cycle wave a at 1,046.27 to avoid a truncation.

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 waves (A) and (B) may now be complete. Intermediate wave (C) may be underway.

Minor wave 1 fits perfectly as a five wave impulse. Minor wave 2 should be complete as a deep zigzag. Minor wave 3 may now exhibit an increase in upwards momentum, and it should have support from volume. The target for minor wave 3 expects it to exhibit a common Fibonacci ratio to minor wave 1.

Minor wave 3 may only subdivide as an impulse. Within minor wave 3, minute waves i and ii may now be complete. Within minute wave iii, minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,211.24.

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). It may last a total Fibonacci 21 or 34 weeks. So far it has lasted 13 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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Minuette wave (i) is a complete five wave impulse.

Minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,211.24.

The breach of the channel about minuette wave (i) provides channel confirmation that minuette wave (i) should be over and minuette wave (ii) should be underway.

Minuette wave (ii) may be any corrective structure except a triangle. At this stage, it looks like it may have begun with a three wave structure, which may be subminuette wave a of a flat correction or subminuette wave w of a combination.

Within a flat correction, subminuette wave b may make a new high above the start of subminuette wave a, as in an expanded flat. Within a combination, there is no rule stating a maximum limit for subminuette wave x; it too may make a new high above the start of subminuette wave w. Therefore, no upper invalidation point is given for this wave count today.

Minuette wave (ii) may be relatively brief and shallow due to the strong upwards pull of the middle of a third wave.

Minuette wave (i) lasted a Fibonacci 8 days. Minuette wave (ii) may last a Fibonacci 5 days, which would see it now continue for a further four days. The 0.382 Fibonacci ratio about 1,235 may be final support.

WEEKLY CHART – DOUBLE ZIGZAG

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It is 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 waves A and B may be complete. Minor wave C must subdivide as a five wave structure. Within minor wave C, minute wave ii may not move beyond the start of minute wave i below 1,181.06.

Intermediate wave (D) would most likely subdivide as a single zigzag.

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 be a complete double zigzag.

The maximum number of corrective structures within a multiple is three. This number refers to W, Y and Z. Each of W, Y and Z may only be simple corrective structures; they may not be multiples. However, the total of three does not include X waves, so X waves may be any corrective structure including multiples and the Elliott wave rule is not violated.

While X waves may be multiples, they very rarely are. The probability of this wave count is reduced.

HOURLY CHART – COMBINATION

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This wave count at the hourly chart level expects that an impulse is now complete, higher; this is labelled minuette wave (c). This wave count now expects a downwards trend to 1,147.34 minimum.

Within the new trend of minor wave Y, minute wave a must subdivide as a five wave structure (most likely an impulse).

Within minute wave a, minuette waves (i) and (ii) may be complete. Within minuette wave (iii), subminuette wave i may be complete and subminuette wave ii may not move beyond the start of subminuette wave i above 1,249.24.

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 3 may be complete. Today minor wave 4 is relabelled as possibly incomplete as a double zigzag.

Minor wave 2 lasted 9 weeks. If minor wave 4 is now complete, then it has lasted 17 weeks. Minor wave 4 would be longer in duration than minor wave 2 by a reasonable margin. For Gold this is unusual, so the probability of this wave count is further reduced.

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.

A strong upwards week makes a new high. There is a series of higher highs and higher lows since mid August. There is strong resistance above about 1,300 to 1,310.

DAILY CHART

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ADX now indicates an upwards trend in place. Price has made a series of higher highs and higher lows since the 16th of August, the basic definition of an upwards trend.

At this time, there is some short-term bearishness with a Dark Cloud Cover candlestick reversal pattern at the last high. Now a long upper wick today is bearish, Stochastics is overbought, and volume is not pushing price lower. The market is falling of its own weight.

At this stage, a short-term pullback or consolidation may be expected to develop within the larger upwards trend. This may be used as an opportunity to join the trend. Look for final support below about 1,235.

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.

The target is at 16.02.

GDX DAILY CHART

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

Today completes a bearish candlestick reversal pattern with support from volume. This increases the strength of the reversal pattern. As this occurs near resistance, with Stochastics overbought, it looks very much today like GDX has found a high.

The expectation now will be for GDX to begin to move down and away from resistance, developing a sustained downwards trend.

This may a good opportunity to enter short positions for GDX for a while. The target would still be at 16.02.

Published @ 09:19 p.m. EST.

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