Upwards movement continued as both Elliott wave counts expected. Targets remain the same.
Summary: There is an upwards trend in place that is very extreme. Conditions are overbought. This can continue while price moves a considerable distance further, or a trend change may occur at any time now. Caution is warranted. Risk management is essential.
For the short term, some weakness in today’s upwards movement suggests more consolidation may continue before an upwards breakout. For confidence an upwards breakout requires support from volume.
The bullish Elliott wave count expects a large interruption to the trend to begin about 1,565.
The bearish Elliott wave count expects the upwards trend to end about 1,582 to 1,586.
Grand SuperCycle analysis is here.
Monthly charts were last published here with video here.
BEARISH ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
This is now the sole remaining bearish Elliott wave count.
It remains possible that Super Cycle wave (b) is an incomplete double zigzag.
The first zigzag in the double is labelled cycle wave w. The double is joined now by a three in the opposite direction, a triangle labelled cycle wave x. The second zigzag in the double is labelled cycle wave y.
Cycle wave y must subdivide as a zigzag if Super Cycle wave (b) is a double zigzag. Within cycle wave y, primary waves A and B may now be complete. No second wave correction within primary wave B may move beyond its start below 1,401.30.
The purpose of the second zigzag in a double is to deepen the correction. So far cycle wave y has already achieved this purpose.
The 0.618 Fibonacci Ratio of Super Cycle wave (a) is at 1,586.
Super Cycle wave (b) may not move beyond the start of Super Cycle wave (a) above 1,920.18.
DAILY CHART
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Primary wave C must complete as a five wave structure. So far intermediate waves (1) through to (4) may be complete. If it continues further as a double flat or double combination, then intermediate wave (4) may not move into intermediate wave (1) price territory below 1,446.51 (this price point is taken from the hourly chart).
Today a new target is calculated at intermediate degree. The most common Fibonacci ratio for a fifth wave is equality in length with its first wave.
If price reaches the first target and keeps rising, then the next target may be used.
HOURLY CHART
Click chart to enlarge.
Primary wave C must complete as a five wave structure, most likely an impulse, which is what it looks to be unfolding as.
Within primary wave C, intermediate waves (1) through to (4) may be complete. Intermediate wave (4) may be complete as an expanded flat. Intermediate wave (4) may also continue sideways as a double flat or double combination. Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,446.51.
BULLISH ELLIOTT WAVE COUNT
WEEKLY CHART
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 the bearish wave count is still considered because 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. Primary wave 3 has now moved above the end of primary wave 1 meeting a core Elliott wave rule. It has now moved far enough to allow room for primary wave 4 to unfold and remain above primary wave 1 price territory. Primary wave 4 may not move into primary wave 1 price territory below 1,346.45.
Cycle wave III so far for this wave count would have been underway now for 52 weeks. It is beginning to exhibit some support from volume and increasing ATR. This wave count now has some support from classic technical analysis.
Redraw 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 low 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.
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. The structure of intermediate wave (5) is now incomplete, so it needs to move higher.
When it arrives, then primary wave 4 may not move into primary wave 1 price territory below 1,346.45.
Because intermediate wave (5) is a fifth wave to end a third wave one degree higher, at primary degree, it may exhibit swift strong movement. It may end with a blow off top.
Draw a channel using Elliott’s technique about intermediate wave (5) as shown in blue. The upper edge may provide resistance for minor wave 5.
HOURLY CHART
Click chart to enlarge.
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 waves 1 through to 4 may now be complete. It is also possible that minor wave 4 may continue sideways as a double flat or double combination. Minor wave 4 may not move into minor wave 1 price territory below 1,450.65.
Look out for the possibility of minor wave 5 to end primary wave 3 to be a blow off top.
TECHNICAL ANALYSIS
MONTHLY CHART
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. Price is now at strong resistance about 1,525.
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
Click chart to enlarge. Chart courtesy of StockCharts.com.
When trends for Gold reach extreme, they can continue still for a few weeks and price can continue for a considerable distance.
When both ADX and RSI reach extreme together, then that is sometimes where a trend ends.
RSI at overbought on the weekly chart is a warning to be cautious; the trend is overbought, but at this stage there is no evidence of a trend change.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Look for support in the first instance at last resistance, which is now at 1,455.
There is resistance about here at 1,520 – 1,525. Next reasonable resistance above is about 1,600.
Assume the upwards trend remains in place until proven otherwise. Proven otherwise may be a strong bearish candlestick pattern, particularly if it comes after a blow off top. At this stage, there is no evidence of a trend change.
Today’s green candlestick has very light volume. At this stage, it looks like a continuation of a small consolidation within the ongoing upwards trend. A new high above 1,522 with support from volume would be an upwards breakout.
GDX WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The Dark Cloud Cover reversal pattern was followed by downwards movement in the following week.
Now a new high indicates the last pullback should be over.
Volume last week has slightly declined, but overall volume is rising with price.
The trend has further to go before it reaches extreme at the weekly chart time frame.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A consolidation may have begun. Look for support about 28.4.
Published @ 06:50 p.m. EST.
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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.
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New updates to this analysis are in bold.
Lara, what if this is just Intermediate 1 or Primary C? I don’t think the bear count is complete.
While price is above 1,401.30 that will be possible.
But for the bear count the structure is now complete, conditions have been extreme and oversold for over a week, there is again strong bearish divergence between price and RSI. It would be typical to see price turn about here.
Downwards movement in todays session is strong.
I’m going to label it complete, but I’m going to have confidence points and explain exactly what they mean.
Dreamer,
I agree. Bear count can still move $100 higher and be ok.
In fact, I’m starting to chart out somewhat of an oil/stock market crash, where gold is “safe haven” bid, then crashes too.
My belief is trading volatility will intensify here over the next couple of months.
A lot.
GLTA
The first target was hit, slightly exceeded, and price has turned sharply.
For the bear wave count, that should be it now. A new downwards trend should be beginning.
For the bullish count, this downwards movement looks like intermediate (5) is now over.
Primary 4 may have arrived.
Was able to exit my short positions this morning actually for a decent profit… Silver getting the 1650 area was my target back down. I don’t know if we are in the bullish or bearish case as of right now but based on my previous analysis I think the market is headed higher for gold and silver over the next two to three months. The more bearish case would probably see an increase in volatility whereas the bullish case would see a fairly straight move back up. I’m also contemplating getting short crude and stocks with this early morning bounce. My goal is to simply play volatility at this point.
I think that’s a good move Corey, I’ve been in and out of the market all day today, both short and long. Just seeing the pattern and trading.