A small range inside day sees the Elliott wave count remain the same. The target remains the same.
Summary: Three long-term targets are now calculated for cycle wave c to end. Confidence in a new downwards trend may be had with a new low below 1,160.75.
For the short term, minor wave 2 may now test resistance about 1,300 – 1,310. Within this range is the 0.382 Fibonacci ratio of minor wave 1 at 1,306.69, which is the preferred target.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
Last monthly charts are here. Video is here.
MAIN ELLIOTT WAVE COUNT
WEEKLY CHART – TRIANGLE
Click chart to enlarge.
This is the preferred wave count.
Cycle wave b may be a complete regular contracting triangle. If it continues further, then 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. 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.
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.
This wave count would expect a cycle degree trend change has just occurred. Cycle wave c would most likely make new lows below the end of cycle wave a at 1,046.27 to avoid a truncation.
Primary wave E should exhibit reasonable weakness as it comes to an end. Triangles often end with declining ATR, weak momentum and weak volume.
If this weekly wave count is correct, then cycle wave c downwards should develop strength, ATR should show some increase, and MACD should exhibit an increase in downwards momentum.
Three targets are calculated for cycle wave c. Cycle wave a lasted 4.25 years. Cycle wave b may be over in 3.17 years. Cycle wave c may last a minimum of 2 years and possibly up to 5 years.
DAILY CHART – TRIANGLE
Click chart to enlarge.
Further confidence in this wave count may be had now that the blue channel is breached.
Classic analysis offers good support to this wave count.
Cycle wave c must subdivide as a five wave structure, either an impulse or an ending diagonal. An impulse is much more common and that shall be how it is labelled unless overlapping suggests a diagonal should be considered.
A new trend at cycle degree should begin with a five wave structure on the daily chart, which will be labelled minor wave 1. A best fit channel is drawn about minor wave 1. This channel is breached by strong upwards movement on Friday, indicating minor wave 1 should be over and now minor wave 2 should be underway.
Minor wave 2 may not move beyond its start above 1,345.90.
HOURLY CHART
Click chart to enlarge.
Minor wave 2 may unfold over a few days. It would most likely subdivide as a single or multiple zigzag, but it may be any corrective structure except a triangle.
Minor wave 2 may end about either the 0.382 Fibonacci ratio at 1,306.69 or the 0.618 Fibonacci ratio at 1,321.94.
Minor wave 2 may not move beyond the start of minor wave 1 above 1,345.90.
Within minor wave 2 so far, minute wave a may be a complete impulse and minute wave b may be an incomplete zigzag. When minute wave b is complete, then another five wave structure upwards for minute wave c may end about resistance at the lower edge of the blue channel copied over from the daily chart.
A small best fit channel is drawn about minute wave b. If this channel is breached by upwards movement, that may be taken as an indication that minute wave b may be over and minute wave c upwards may then be underway.
If minute wave a is correctly labelled as a five wave structure, then minute wave b may not move beyond its start below 1,282.12.
WEEKLY CHART – DOUBLE ZIGZAG
Click chart to enlarge.
It is possible that cycle wave b may be an incomplete 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 four fifths complete.
Within multiples, X waves are almost always zigzags and rarely triangles. Within the possible triangle of primary wave X, it is intermediate wave (B) that is a multiple; this is acceptable, but note this is not the most common triangle sub-wave to subdivide as a multiple. These two points reduce the probability of this wave count.
Intermediate wave (D) may be complete. The (B)-(D) trend line is almost perfectly adhered to with the smallest overshoot within intermediate wave (C). This is acceptable.
Intermediate wave (E) should continue to exhibit weakness: ATR should continue to show a steady decline, and MACD may begin to hover about zero.
Intermediate wave (E) may not move beyond the end of intermediate wave (C) below 1,160.75.
This wave count may now expect downwards movement for several weeks.
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.
ALTERNATE ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
If Gold is in a new bull market, then it should begin with a five wave structure upwards on the weekly chart. However, the biggest problem with this wave count is the structure labelled cycle wave I because this wave count must see it as a five wave structure, but it looks more like a three wave structure.
Commodities often exhibit swift strong fifth waves that force the fourth wave corrections coming just prior to be more brief and shallow than their counterpart second waves. It is unusual for a commodity to exhibit a quick second wave and a more time consuming fourth wave, and this is how cycle wave I is labelled. The probability of this wave count is low due to this problem.
Cycle wave II subdivides well as a double combination: zigzag – X – expanded flat.
Cycle wave III may have begun. Within cycle wave III, primary wave 1 may now be complete. The target for primary wave 2 is the 0.618 Fibonacci ratio of primary wave 1. Primary wave 2 may not move beyond the start of primary wave 1 below 1,160.75.
A black channel is drawn about primary wave 1. Primary wave 2 may breach the lower edge of this channel.
Cycle wave III so far for this wave count would have been underway now for 27 weeks. It should be beginning to exhibit some support from volume, increase in upwards momentum and increasing ATR. However, volume continues to decline, ATR continues to decline and is very low, and momentum is weak in comparison to cycle wave I. This wave count lacks support from classic technical analysis.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
There are now two bearish candlestick reversal patterns on the weekly chart: a Shooting Star and a Bearish Engulfing pattern. This supports the view that a high is in place.
Last weekly candlestick may not be considered a bullish reversal pattern as it does not come after a downwards trend at this time frame. The long lower wick is still bullish.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
There has been a shorter lived downwards trend at the daily chart level. That trend may now be considered over with a strong bullish candlestick reversal pattern that has support from volume and a bullish signal from On Balance Volume.
Look for a test of resistance about 1,300 to 1,310.
A small inside day with a balance of volume downwards and weak volume does not change the view that a bounce may be unfolding here to test resistance. On Balance Volume at support also reinforces this view today.
GDX WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The Bearish Engulfing pattern at the weekly chart level should still be given weight in this analysis. It signals an end to the upwards trend and a new downwards or sideways trend.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Friday saw an upwards breakout from a small consolidation that has support from volume and a breakaway gap. Look now for support at the breakaway gap at 21.89 and resistance above about 22.50 and then 22.90.
Two long lower wicks now indicate more upwards movement as fairly likely this week.
Published @ 08:56 p.m. EST.
—
Careful risk management protects your trading account(s).
Follow my two Golden Rules:
1. Always trade with stops.
2. Risk only 1-5% of equity on any one trade.
Hourly chart updated:
Minor wave 2 may now be over at resistance at the lower edge of the blue channel which is copied over from the daily chart.
This may be a good entry opportunity for a short position on Gold which may be held for a longer term trade.
As always, the most important aspect of trading is risk management. Always use stops and invest only 1-5% on any one trade. Risk here may be a little above the blue trend line, so the risk / reward ratio here is good. Allow a little room for this market to move, and allow room for your brokers spread.
For more risk averse traders you may want to wait until the pink channel is breached by downwards movement. A full hourly candlestick below and not touching the lower edge, with downwards not sideways movement, would be a breach.
A breach of that channel would indicate minor 2 should be over and minor 3 should be underway.