Currently, price is bound by support and resistance. The preferred Elliott wave count sees this consolidation as a B wave that is incomplete.

Summary: There remains an upwards trend in place at the weekly chart level. With conditions extreme, a sideways consolidation may continue this week and possibly for another few weeks to relieve extreme conditions. This scenario favours the main bearish wave count. The final target for that count is 1,595.

The bullish Elliott wave count remains valid while price remans above 1,346.45. The mid-term target is 1,565.

Grand SuperCycle analysis is here.

Monthly charts were last published here with video here.

BEARISH ELLIOTT WAVE COUNTS

MAIN WEEKLY CHART

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It remains possible that Super Cycle wave (b) is an incomplete double zigzag.

The first zigzag in the double is seen in the same way for both bearish wave counts, a zigzag labelled cycle wave w.

This main bearish wave count sees cycle wave x as regular contracting triangle. Cycle wave y must subdivide as a zigzag if Super Cycle wave (b) is a double zigzag. Within cycle wave y, primary wave A may now be complete, and primary wave B may not move beyond the start of primary wave A below 1,266.61.

Primary wave B may continue further for a few more weeks to relieve extreme conditions and complete a corrective Elliott wave structure.

MAIN DAILY CHART

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Within cycle wave y, primary wave A may now be a complete five wave impulse.

Primary wave B may unfold over a few weeks. Primary wave B may subdivide as any one of more than 23 possible corrective Elliott wave structures. It may be a quick sharp pullback as a zigzag, or it may be a time consuming sideways consolidation as a combination, flat or triangle.

Primary wave B should exhibit weakness.

Primary wave B may end about either the 0.382 or 0.618 Fibonacci Ratios. It may be relatively shallow if it finds support about 1,375, so the 0.382 Fibonacci ratio may be favoured as a target.

If primary wave B subdivides as any one of an expanded flat, running triangle or combination, then it may include a new high above its start at 1,450.65. A new high above this point does not invalidate this wave count at the daily chart level.

HOURLY CHART

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Primary wave B may be any one of more than 23 possible Elliott wave corrective structures. Intermediate wave (A) may subdivide as either a three or a five.

When A waves subdivide as threes, they most commonly do so as zigzags (which subdivide 5-3-5).

When A waves subdivide as fives, they most commonly do so as impulses (which subdivide 5-3-5-3-5).

The first 5-3-5 downwards may be unfolding. This is labelled as the start of a zigzag for intermediate wave (A), with minor wave A complete and minor wave B incomplete as an expanded flat. When minor wave B may be complete, then minor wave C may unfold lower.

This movement may also be labelled as a completing impulse for intermediate wave (A), with minor wave 1 complete and minor wave 2 an incomplete expanded flat. Thereafter, minor wave 3 may unfold lower.

Minor wave B may not move beyond the start of minor wave A.

If intermediate wave (A) is unfolding as an impulse, then minor wave 2 may not move beyond the start of minor wave 1. The rule regarding B waves within zigzags and second waves within impulses is the same.

Within the expanded flat, which is labelled minor wave B, minute wave a is a three and minute wave b is a three. Minute wave b is a 1.17 length of minute wave a, which is within the normal range of 1 to 1.38 for B waves within flat corrections. Minute wave c would be extremely likely to make at least a slight new high above the start of minute wave a at 1,432.29 to avoid a truncation and a very rare running flat.

ALTERNATE WEEKLY CHART

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This wave count is now judged to be an alternate. Small range days are not convincing as the start of a strong new downwards trend. However, this wave count remains valid.

It remains possible that a trend change at Super Cycle degree occurred on the 19th of July and a new downwards wave began there.

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 cycle 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.

Cycle wave y may be a complete zigzag. Within the zigzag, primary wave C is 5.19 short of equality in length with primary wave A.

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 a bearish wave count.

A new high by any amount at any time frame above 1,450.65 would invalidate this wave count.

ALTERNATE DAILY CHART

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Primary wave C may now be a complete impulse.

Gold often exhibits surprisingly short and brief fifth waves out of its fourth wave triangles, and this wave count expects that it may have done so here. This wave count follows common tendencies for this market.

Super Cycle wave (c) should move below the end of Super Cycle wave (a) at 1,046.27 to avoid a truncation. Super Cycle wave (c) may only subdivide as a five wave structure, most likely an impulse. Within Super Cycle wave (c), no second wave correction may move beyond the start of its first wave above 1,450.65.

BULLISH ELLIOTT WAVE COUNT

WEEKLY CHART

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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 bearish wave counts are still considered above as they have 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 50 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 last high. 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.

DAILY CHART

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Primary wave 3 may only subdivide as an impulse. Within the impulse, intermediate waves (1) through to (4) are all now complete. It is possible that intermediate wave (5) could be over at the last high, but for this wave count it would look more normal if it continued higher.

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

On the hourly chart, extend the trend lines from the triangle of intermediate wave (4) out to the right. The upper B-D trend line may be providing support.

HOURLY CHART

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Intermediate wave (5) may only subdivide as a five wave structure, either an impulse or an ending diagonal. Fifth waves to end third waves one degree higher, as this one is, almost always subdivide as impulses (that is what shall be expected).

Within intermediate wave (5), minor wave 1 may be complete.

Minor wave 2 may not move beyond the start of minor wave 1 below 1,400.64. Minor wave 2 may be a complete double zigzag.

If this wave count is invalidated at the hourly chart level, it would indicate that primary wave 3 should be labelled as complete at the last high. At that stage, it would be expected that primary wave 4 should be underway and the invalidation point at 1,346.45 would apply.

If minor wave 2 is over, then minor wave 3 upwards should exhibit strength. It should exhibit an increase in both momentum and ATR, with support from volume. So far that is not happening.

TECHNICAL ANALYSIS

MONTHLY CHART

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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.

The new high in price above prior highs for March / April 2018 have not been matched by new highs for On Balance Volume. This divergence is bearish and supports a bearish Elliott wave count. This divergence may be given a little weight because it is strong and evident on the monthly chart.

WEEKLY CHART

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A new high two weeks ago exhibits some bearish divergence between price and RSI. However, as has been seen recently, sometimes this divergence simply disappears.

The bottom line remains that a multi year breakout occurred a few weeks ago, and it occurred with strength in volume. While price remains above support about 1,377 and ADX indicates an upwards trend, this chart will remain overall bullish.

DAILY CHART

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Price is now range bound with resistance about 1,455 and support about 1,395. There is very strong support below this about 1,375. The upwards gap today may be a pattern gap because it comes within a consolidation zone. Pattern gaps are usually closed.

Extreme conditions for ADX have not yet been relieved. The ADX line remains above both directional lines and still close to 40.

RSI is now back in neutral territory.

Another week or so of consolidation or pullback may be required to complete before the larger upwards trend is ready to resume.

GDX WEEKLY CHART

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The bearish candlestick reversal pattern last week indicates a potential trend change.

Candlestick reversal patterns make no comment on the direction of the new trend (a full 180 degree reversal or sideways) nor for how long it may last. This reversal pattern may indicate a consolidation to unfold here, or it may indicate a new downwards trend.

Strength or weakness in the next one to very few weeks may indicate which scenario may be preferred.

GDX DAILY CHART

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An upwards trend since the 18th of May has been in place with a series of higher highs and higher lows. As long as the last swing low of 1st of July at 24.53 remains intact, this view should remain dominant. There is no evidence of a trend change, although the trend is very extreme and conditions at the last high reached overbought.

A new swing low below 24.53 would confirm a trend change.

Published @ 09:17 p.m. EST.

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New updates to this analysis are in bold.