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Downwards movement was expected to end within a very few hours after last analysis was published and thereafter to be followed by an upwards breakout. Today price has closed above the upper edge of the pennant pattern, but a lack of support from volume so far is suspicious.

Summary: An upwards breakout may be underway. If the next session has support from volume and continues higher, then confidence may be had in it.

There are two Elliott wave scenarios in this analysis (published below in this order):

1. The bear market continues: the breakout above multi year resistance was false but incomplete. One final high to 1,452 or 1,489 may unfold before a multi year trend change and a new downwards wave to new lows.

2. A bull market is underway: the back test of support was a fourth wave correction, now complete. The target for the mid term is 1,565. It is this scenario which currently has the most support from classic technical analysis, but it still has the biggest problem in terms of Elliott wave structure.

A classic analysis target from the pennant pattern is at 1,537.

Grand SuperCycle analysis is here.

Last monthly charts are here.

Overall, the bearish wave counts still have a higher probability based upon Elliott wave structures. However, it would be best to leave price to invalidate either the bullish or bearish scenario before having confidence in which is correct.

BEARISH ELLIOTT WAVE COUNTS

FIRST WEEKLY CHART

Gold Elliott Wave Chart Weekly 2019
Click chart to enlarge.

It remains possible that the bear market for Gold may yet continue. It is possible that cycle wave b may be nearing completion. Cycle wave b may be a double zigzag.

Double zigzags are common structures, but within them their X waves are almost always single zigzags that are relatively brief and shallow. However, this wave count sees primary wave X as a complete double combination: zigzag – X – expanded flat.

An X wave may occasionally subdivide as a multiple. In a multiple the maximum number of corrective structures is three: W, Y and Z. To label any one of W, Y or Z as a multiple would violate the Elliott wave rule. Here, the rule is met.

Primary wave Y may be an incomplete zigzag. The purpose of a second zigzag in a double zigzag is to deepen the correction when the first zigzag does not move price far enough. This purpose has been achieved.

A new low now by any amount at any time frame below 1,346.45 would invalidate the bullish wave count below and provide some confidence in this wave count.

DAILY CHART

Gold Elliott Wave Chart Daily 2019
Click chart to enlarge.

This chart focusses on the impulse of intermediate wave (C).

Intermediate wave (C) may be an incomplete impulse. The last several sessions may be a triangle for minor wave 4.

The target for intermediate wave (C) is calculated for it to reach equality in length with intermediate wave (A).

A second higher target is calculated at primary degree for primary wave Y to reach equality in length with primary wave W. If price reaches the first target and either the structure of minor wave 5 is incomplete or price keeps rising, then the second target may be used.

After cycle wave b may be complete, this wave count would require a new low below 1,346.45 for confidence.

Note: The price spike down to 1,378 on the daily chart for the 11th of July is highly suspicious because it is not visible on time frames below daily. Now the high on the daily chart for the 15th of July at 1,429 is not visible on the hourly chart, so it is also suspicious. Barchart is aware of the discrepancy; they are working on fixing the problem. Because neither of these price points are visible on time frames below daily, they cannot be incorporated into the analysis because there is no structure at lower time frames to analyse for them. They are ignored.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2019
Click chart to enlarge.

The triangle of minor wave 4 now looks complete at all time frames. The upwards movement at the end of this last session has closed well above the upper triangle trend line. This looks like an upwards breakout.

Minor wave 5 must subdivide as a five wave motive structure, most likely an impulse. Within minor wave 5, minute wave ii may not move beyond the start of minute wave i below 1,400.64.

Gold has a tendency to exhibit surprisingly short fifth waves. This bearish wave count expects minor wave 5 may be relatively short and brief if the first target only is met. This would follow a common behaviour for this market.

BULLISH ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly 2019
Click chart to enlarge.

This wave count sees the the bear market complete at the last major low for Gold in November 2015.

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 and just after 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. This wave count still suffers from this very substantial problem, and for this reason a bearish wave count is still considered above as it has a better fit in terms of Elliott wave structure.

Cycle wave II subdivides well as a double combination: zigzag – X – expanded flat.

Cycle wave III may have begun. Within cycle wave III, primary waves 1 and 2 may now be complete. If it continues lower as a double zigzag, then primary wave 2 may not move beyond the start of primary wave 1 below 1,160.75.

Cycle wave III so far for this wave count would have been underway now for 47 weeks. It may be beginning to exhibit some support from volume and increasing ATR. If this increase continues, then this wave count would have some support from technical analysis.

Draw an acceleration channel about primary waves 1 and 2: draw the first trend line from the end of primary wave 1 to the last high, then place a parallel copy on the end of primary wave 2. Keep redrawing the channel as price continues higher. When primary wave 3 is complete, then this channel would be drawn using Elliott’s first technique about the impulse. The lower edge may provide support.

Primary wave 4 may not move into primary wave 1 price territory below 1,346.45. Because the data used for this analysis is cash market data no overlap between primary waves 4 and 1 should be allowed. The invalidation point is absolute.

The bullish and bearish wave counts will diverge when the next wave upwards, which for this bullish wave count is labelled intermediate wave (5), is complete. At that stage, this bullish wave count will expect only a consolidation or pullback for primary wave 4, but the bearish wave count will expect a trend change. The price point 1,346.45 clearly differentiates the two ideas.

DAILY CHART

Gold Elliott Wave Chart Daily 2019
Click chart to enlarge.

This daily chart focusses on the impulse of primary wave 3.

Primary wave 3 may only subdivide as an impulse. Primary wave 3 has now moved above the end of primary wave 1, meeting a core Elliott wave rule.

When it arrives, primary wave 4 may not move into primary wave 1 price territory below 1,346.45.

Intermediate wave (5) may exhibit further strength. The target for primary wave 3 is calculated using the most common Fibonacci ratio to primary wave 1.

The structure of primary wave 3 as an incomplete impulse for this wave count is seen in exactly the same way as the incomplete impulse for intermediate wave (C) in the bearish daily chart. Both wave counts view a fourth wave triangle now complete. This bullish wave count sees the triangle as intermediate wave (4).

Look out now for the possibility of another blow off top as intermediate wave (5) to end primary wave 3 comes to an end.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2019
Click chart to enlarge.

The triangle of intermediate wave (4) now looks complete at all time frames. The upwards movement at the end of this last session has closed well above the upper triangle trend line. This looks like an upwards breakout.

Intermediate wave (5) must subdivide as a five wave motive structure, most likely an impulse. Within intermediate wave (5), minute wave ii may not move beyond the start of minute wave i below 1,400.64.

TECHNICAL ANALYSIS

MONTHLY CHART

Gold Monthly 2019
Click chart to enlarge. Chart courtesy of StockCharts.com.

Gold has effected an upwards breakout above multi-year resistance and above the cyan bear market trend line. Look for next resistance identified on the chart.

WEEKLY CHART

Gold Weekly 2019
Click chart to enlarge. Chart courtesy of StockCharts.com.

Gold has broken out of a multi-year consolidation, which saw resistance about 1,375. The breakout has support from volume, so confidence may be had in it.

Price now has some strength with rising ATR. Conditions remain overbought. The pullback so far has not relieved extreme conditions and has lasted only two weeks.

Support about 1,375 continues to hold.

When Gold has a strong trend, conditions may reach extreme and may remain there for some time while the trend continues and price moves a substantial distance.

DAILY CHART

Gold Daily 2019
Click chart to enlarge. Chart courtesy of StockCharts.com.

A pennant pattern may be complete, lasting 14 sessions. The close above the upper edge of the pennant trend line today may be an upwards breakout. However, upwards breakouts require support from volume for confidence and this one lacks that. This breakout is so far suspicious.

If another daily candlestick closes green with support from volume, then confidence may be had in the upwards breakout. That is not the case today with the data in hand.

It is possible that the consolidation of the last 15 sessions may continue sideways and lower to test support more strongly about 1,375 before price moves up and away.

GDX WEEKLY CHART

GDX Weekly 2019
Click chart to enlarge. Chart courtesy of StockCharts.com.

The upwards trend continues, but conditions are now overbought. This can continue for a while during a strong trend. At this stage, there are no signs of a reversal.

Last week price has closed near the high. This is bullish, suggesting more upwards movement this week.

Weak volume is a slight concern.

GDX DAILY CHART

GDX Daily 2019
Click chart to enlarge. Chart courtesy of StockCharts.com.

Today completes an upwards breakout from a small consolidation. This is not suspicious for GDX because it has support from volume.

However, upwards movement here may be relatively short lived: ADX indicates a very extreme trend and there is some weakness with bearish divergence between price and RSI. At this time, GDX looks vulnerable to a larger consolidation or a trend change developing.

A short-term target taken from the width of the last consolidation may be about 28.02.

Published @ 07:57 p.m. EST.


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