More upwards movement was expected to the next target at 1,313 – 1,314. The high for Tuesday’s session was at 1,311.81.
Summary: The next target is almost met. It remains at 1,313 – 1,314.
If price gets up to this target and keeps on rising, or if it gets there and the Elliott wave structure is again incomplete, then the next target is at 1,338.
Thereafter, a huge trend change is expected: a new wave down to last years would be expected to make new lows below 1,046.27. This trend change may now come within the next 24 hours.
For confidence in a trend change the following things may be seen:
1. A candlestick reversal pattern on the daily chart.
2. A new low below 1,276.84.
3. A breach of the blue channel on the daily chart.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
Last historic analysis with monthly charts is here.
Only two remaining wave counts have a reasonable probability and are published below: a triangle (the preferred wave count) and a double zigzag.
MAIN ELLIOTT WAVE COUNT
WEEKLY CHART – TRIANGLE
Click chart to enlarge.
Cycle wave b may be an almost complete 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. This structure is now almost complete.
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 looks like it is unfolding as a single 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.
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.
It is possible now that primary wave E may end this week. Some reasonable weakness should be expected at its end. Triangles often end with declining ATR, weak momentum and weak volume.
DAILY CHART – TRIANGLE
Click chart to enlarge.
Primary wave E may now be almost complete 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 now be almost complete.
Minor wave 2 is a deep 0.75 zigzag. Minor wave 4 may now be a complete a zigzag. Alternation is a guideline, not a rule, and is not always seen. Zigzags are the most common corrective structure. There is still alternation in depth: minor wave 2 was deep and minor wave 4 was very shallow.
Minor wave 3 exhibits the most common Fibonacci ratio to minor wave 1.
It is now possible to see minor wave 5 complete at the daily and hourly chart level. However, it is always safest to assume the trend remains the same until proven otherwise. For any confidence in a trend change it needs to be indicated by one or more of the following:
1. A candlestick reversal pattern on the daily chart.
2. A new low below 1,276.84.
3. A breach of the blue channel on the daily chart.
Two targets now remain for minor wave 5 to end. If price reaches the next target and the structure is incomplete or price just keeps on rising through it, then the third target may be used.
All targets would expect primary wave E to fall short of the maroon A-C trend line. This is the most common look for E waves of Elliott wave triangles.
HOURLY CHART
Click chart to enlarge.
It is possible that minute wave v could be over at todays high, but as yet there is no sign of a trend reversal. Assume the trend remains the same until proven otherwise.
The next target is almost met. If price keeps rising above this target, then use the third final target.
Invalidation points to the downside are removed because a trend change is expected.
When the narrow pink Elliott channel is breached by downwards movement, that shall be the earliest indication that cycle wave b may be over.
A breach of the wider blue channel on the daily chart would be the next indication that cycle wave b may be over. Some reasonable confidence may be had at that stage that cycle wave c has begun, and a target may then be calculated for it.
WEEKLY CHART – DOUBLE ZIGZAG
Click chart to enlarge.
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 iv should now be over. Within minute wave v, no second wave correction may move beyond its start below 1,276.84.
Intermediate wave (D) would most likely subdivide as a single zigzag. Intermediate wave (D) should end at the upper (B)-(D) trend line for this wave count, so that the triangle adheres neatly to this trend line. That price point is about 1,354. This wave count now requires upwards movement to continue. It would not be acceptable for the upper (B)-(D) trend line to have breaches or substantial overshoots. Elliott wave triangles almost always adhere very neatly to their trend lines.
This wave count may now expect choppy overlapping movement in an ever decreasing range for a few 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.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
ADX indicates a potential trend change to upwards, but as yet it does not indicate a new trend at this time frame.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The close above the upper flag trend line with support from volume is a classic upwards breakout.
Using the flag pole length, a target at 1,359 is calculated. This target looks rather optimistic.
Price is now rising on sharply declining volume; upwards movement may now be limited. Price is within a very strong area of resistance, which is about 1,300 – 1,310, and it has not managed to close above this zone. Stochastics is entering overbought. RSI exhibits bearish divergence.
This classic analysis supports the first Elliott wave count, but as yet there is no evidence of an end to this upwards trend.
GDX WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A close back above 20.80 switches the short-term outlook from bearish to neutral or bullish. The short-term daily chart may be more indicative here.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The flag pattern remains valid for GDX. It lasted 14 sessions and now looks complete with an upwards breakout on Friday.
Flags are continuation patterns. The target would be about 22.60.
A shaven head and a long lower wick on Tuesday’s candlestick, along with support from volume, suggest more upwards movement immediately ahead for GDX.
Published @ 08:57 p.m. EST.
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Follow my two Golden Rules:
1. Always trade with stops.
2. Risk only 1-5% of equity on any one trade.
I sold GDX & GDXJ at the tippy top after the FED meeting…..locked in some nice gains ….nice to nail it…..thanks Lara……sold off immediately after I sold it
Fantastic! That takes discipline. Nicely done.
Updated hourly chart for Gold:
This looks like a possible blow off top, a price shock that may be quickly reversed. If this wave count is correct that is.
If the double ZZ count is correct, then upwards movement should continue.
Look out for possibly strong resistance just ahead at the blue channel copied over from the daily chart. That would see upwards movement reverse about 1,320, which is neither of my targets.
Aaaaaannnnd… price is now well above the blue trend line. Still going up.
An overshoot for a fifth wave? That’s possible.
But the trend is up. Until proven otherwise.
Still, a warning about these kinds of price shocks. They’re often strongly reversed. If long right now, ensure you’ve protected profits with stops.
Wow that was some spike upwards. Interesting
ds,
Just my two cents. Lara probably wouldn’t draw a downtrend line like this as it’s not exact, but to me using a “best fit” line seems to work well now on the monthly chart. I don’t find the exact placement of a “Magee” downtrend line particularly useful anymore as price crossed back and forth across the line before finally breaking out.
https://www.tradingview.com/x/5uuey9AR/
Thank you for your response. I have the same trendline/thought. It looks like by Lara’s definition of breakout, the monthlies passed the Magee on her drawings. Hard to see it though.
I agree Dreamer. I’m also having some difficulty finding a good line on the monthly chart.
Lara, this is a request for recent monthly candles to show on your monthly charts for gold. I’m having trouble seeing where Magee line falls as you’ve drawn it with your software. Also, if smaller labeling is included in analysis, are both alternates still valid? Please advise. Thanks.
Here’s the monthly chart with the Magee trend line. TBH it’s no longer being respected, it’s been crossed in both directions too often now to be of any use and so should be redrawn.
For cycle wave b, the counts remaining valid are the triangle, double zigzag and the combination. The combination is hugely problematic though, this bounce is way too high to have the right look. I don’t want to publish that.
Here it is again with the line redrawn. Price is right now slightly above it. Let’s see how this session closes and what happens tomorrow.
thank you Lara. do i understand that the magee is not allowed to have false breakouts/?? (darn shift key- need a new keyboard)
No. Nothing in TA is certain. Not even a Magee trend line.
They most often work, but not always.
And the fact is price has broken above the line… only to then return below it. If after an upwards breakout that line had offered support then I’d recognise it. But each time a line is breached that reduces its technical significance. That line has been crossed a few times now, it has no longer any reasonable significance.