The neck line of the Head and Shoulders pattern has provided resistance for a back test. The target calculated from the Head and Shoulders pattern is just $3 off the target calculated using the Elliott wave count and Fibonacci Ratios.

Summary: Expect the downwards trend to resume.

The Elliott wave target is at 1,220. The classic analysis target is at 1,217. Risk is just above the upper edge of the base channel on the daily chart.

Look out now for a possible strong increase in downwards momentum this week.

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.

Grand SuperCycle analysis is here.

Last monthly charts are here. Video is here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART – TRIANGLE

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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 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 has exhibited reasonable weakness as it came 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

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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 base channel is drawn about minor waves 1 and 2. There will be bounces and consolidations on the way down. The last bounce has found resistance at the upper edge of the base channel. Towards its middle or end the power of a third wave may be able to break below support at the lower edge of the base channel. The upper edge of the base channel may be used to calculate a trailing stop for short positions.

Minor wave 3 may only subdivide as an impulse. Within the impulse, minute waves i and ii may now be complete and minute wave iii may only subdivide as an impulse. Within minute wave iii, minuette waves (i) and (ii) may now be complete. If minuette wave (ii) moves any higher, it may not move beyond the start of minuette wave (i) above 1,310.17.

This wave count now expects there may be a completed series of three overlapping first and second waves. This expects an increase in downwards momentum as the middle of a third wave unfolds.

It is possible that minute wave iii and / or minor wave 3 may end with a selling climax; either or both may exhibit a swift and strong fifth wave to end the impulse. This behaviour is typical of commodities, and this tendency is especially prevalent for third wave impulses.

HOURLY CHART

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It is possible that minuette wave (ii) may have been complete at Friday’s high as a double zigzag. The best fit channel drawn about it was breached on Monday by downwards movement.

Another first and second wave may be complete at the hourly chart level, labelled subminuette waves i and ii. If it continues higher, then subminuette wave ii may not move beyond the start of subminuette wave i above 1,288.37.

WEEKLY CHART – DOUBLE ZIGZAG

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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.

Intermediate wave (E) should subdivide as a zigzag labelled minor waves A-B-C. Zigzags subdivide 5-3-5, exactly the same the start of an impulse.

The preferred wave count labels downwards movement minor waves 1-2-3, and this wave count labels downwards movement minor waves A-B-C. At the daily and hourly chart levels, the subdivisions for both wave counts are seen in the same way.

ALTERNATE ELLIOTT WAVE COUNT

WEEKLY CHART

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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 36 weeks. It should be beginning to exhibit some support from volume, increase in upwards momentum and increasing ATR. However, 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.

A green weekly candlestick, a long lower wick, and support from volume for upwards movement this week suggest more upwards movement next week.

DAILY CHART

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From August 2018 Gold moved higher with a series of higher highs and higher lows. This series remained intact until the 1st of March 2019 when a lower low was made. At that stage, it was possible that Gold had seen a trend change.

There is now a new series of two lower swing highs and two lower swing lows. This supports the idea that there has been a trend change and Gold is in a new downwards trend. ADX now agrees.

A complex Head and Shoulders pattern is identified. The neck line has been breached. A target is at 1,217. The neck line is not perfectly showing where this throwback is finding resistance, but it is fairly close. A strong red daily candlestick now down from about this line looks like the throwback may be complete.

This bounce looks like a counter trend movement within a new downwards trend at this stage.

GDX WEEKLY CHART

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There is now a series of two lower highs and lower lows at the weekly chart level. GDX may have seen a trend change to downwards, but ADX does not yet agree. The bearish signal from On Balance Volume supports this view.

For the short term, price looks to be bouncing up off support about 20.80. The lower wick suggests this bounce may continue.

GDX DAILY CHART

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

At the daily chart level, the view of an upwards trend may be in doubt with a new swing low on the 1st of March 2019 that moved below the prior swing low of the 14th of February 2019. At that stage, the series of higher highs and higher lows was no longer intact and a trend change was possible.

Since then price has not made another higher high.

Price closed below the lower triangle trend line on a downwards day that has support from volume. Volume is not required for a downwards breakout, but more confidence in the breakout may be had when volume does support downwards movement.

A target calculated from the triangle width is now at 19.58. This is also about the next level of support.

For the very short term, volume today suggests the bounce may be complete.

Published @ 06:55 p.m. EST.

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1. Always trade with stops.

2. Risk only 1-5% of equity on any one trade.

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New updates to this analysis are in bold.