Overall, both Elliott wave counts have expected downwards movement. The first short-term target at 1,464 has almost been met with a low today at 1,465.83.
Summary: The next short-term target may now be at 1,420. A classic analysis target using the flag pattern is at 1,426.
The bearish Elliott wave count expects a new downwards trend to last one to several years has begun. Confidence in this view may be had if price makes a new low by any amount at any time frame below 1,346.45.
The bullish Elliott wave count expects a primary degree fourth wave is unfolding, forming a large consolidation to end in possibly 5 more sessions. The eventual area of support for the consolidation is expected to be about 1,431.
Grand SuperCycle analysis is here.
Monthly charts were last published here with video here.
BEARISH ELLIOTT WAVE COUNT
WEEKLY CHART
It is possible that Super Cycle wave (b) is complete as a double zigzag.
The first zigzag in the double is labelled cycle wave w. The double is joined by a three in the opposite direction, a triangle labelled cycle wave x. The second zigzag in the double is labelled cycle wave y.
The purpose of the second zigzag in a double is to deepen the correction. Cycle wave y has achieved this purpose.
A new low below 1,346.45 would add strong confidence to this wave count. At that stage, the bullish Elliott wave count would be invalidated.
A wide best fit channel is added in light blue. This channel contains all of Super Cycle wave (b) and may provide resistance and support. Copy this channel over to daily charts.
DAILY CHART
Within cycle wave y, the triangle that ended on the 17th of July may have been primary wave B. Primary wave C may have begun there. Primary wave C must subdivide as a five wave structure; it could be a complete impulse.
Within cycle wave y, there is no Fibonacci Ratio between primary waves A and C.
Draw a small channel about minor wave 2 using Elliott’s technique for a correction: draw the first trend line from the start of minute wave a to the end of minute wave b, then place a parallel copy on the end of minute wave a. A breach of this channel is a strong indication that minor wave 2 should be over and minor wave 3 should be underway. The lower edge of this channel may now provide resistance for bounces along the way down.
HOURLY CHART
Both hourly charts see minor 3 now underway.
For both wave counts, minor wave 3 may only subdivide as an impulse. Within the impulse, minute wave i may again be complete. A bounce for minute wave ii may be relatively brief and shallow. Minute wave ii may not move beyond the start of minute wave i above 1,534.54.
Minute wave ii may find resistance at the lower edge of the Elliott channel, which is copied over from the daily chart.
When minute wave ii is complete, then a third wave down at two degrees should begin. This should exhibit an increase in downwards momentum.
BULLISH ELLIOTT WAVE COUNT
WEEKLY CHART
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 59 weeks. It is beginning to exhibit some support from volume and increasing ATR. This wave count now has some support from classic technical analysis.
The channel drawn about cycle wave III is an adjusted Elliott channel. The lower edge is pulled lower. Primary wave 4 may find support about the lower edge.
Add the wide best fit channel to weekly and daily charts.
DAILY CHART
Primary wave 4 may be continuing as an expanded flat, which is a common corrective structure. This would see alternation in structure with the zigzag of primary wave 2.
Primary wave 2 lasted 43 sessions. Primary wave 4 may be expected to be more brief; Gold usually exhibits more brief fourth waves than their counterpart second waves. Primary wave 4 may not exhibit a Fibonacci number in duration. It may be about even in duration with primary wave 2. So far primary wave 4 has lasted 34 sessions.
Within primary wave 4, intermediate wave (C) has now moved below the end of intermediate wave (A) at 1,481.91 avoiding a truncation and a very rare running flat.
Primary wave 4 may not move into primary wave 1 price territory below 1,346.45.
HOURLY CHART
Intermediate wave (C) must complete as a five wave structure. This structure should look reasonably like a five on the daily chart. While minor wave 4 may be more brief than minor wave 2, it should still last at least one or two sessions.
Minor wave 3 may now be a complete impulse. If it is over at today’s low, then it is slightly shorter than minor wave 1 by $2.33. Minor wave 5 would be limited to no longer than equality in length with minor wave 3 at $68.79, so that the core rule stating minor wave 3 may not be the shortest actionary wave is met.
Minor wave 4 may be a brief and shallow structure. It may not move into minor wave 1 price territory above 1,484.88.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
When trends reach very extreme, candlestick reversal patterns should be given weight. The Dark Cloud Cover bearish reversal pattern is given more bearish weight from the long upper wick.
The risk of a major high and a trend change or a large time consuming consolidation continuing here is very high. These two scenarios effectively follow the main bearish wave count (major trend change) or bullish wave count (a large time consuming consolidation).
A weak bearish signal from On Balance Volume adds confidence to this analysis.
Last week completes an upwards week with a higher high and a higher low, but the candlestick has closed red and the balance of volume is down. Volume is pushing price lower. The longer upper wick on this weekly candlestick is also bearish.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A target calculated from the flag pole would be about 1,426.
Today effects a downwards breakout from the flag pattern. Next support identified is about 1,455 – 1,450.
GDX WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Last week saw price move higher with a higher high and a higher low, but the candlestick is red and the balance of volume is down. The longer upper wick is also bearish.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A target would be at 23.87. The breakaway gap for Friday’s open should offer resistance now at 28.09.
Published @ 06:45 p.m. EST.
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New updates to this analysis are in bold.
hourly chart updated for the bear count, this one looks good
the target for minute ii is resistance at the lower edge of the extended channel that was drawn about minor 2. that’s about the 0.382 Fibonacci Ratio of minute i.
thanks Lara – hope you had a good sleep!
Thanks for these updates when you have a chance to do them. I know it is not part of the service so much appreciated. I guess you guys are looking forward to getting out of your winter. I was in Wellington in Nov a few years back and it was about 45 degrees F. It warmed up nicely in dec and jan and I had an awesome time. I did the tongariro crossing, went to the wineries in the North island and stayed in wellington for a few weeks. Awesome gardens up on the tram ride. Queenstown was my favorite spot. I really enjoyed that and did a bit of the routeburn trail off glenorchy. Didn’t even have to use my no. 8 wire ;).
Hi Lara,
Could you give an invalidation point for the bullish call on GDX? What would be the upper limit on wave I?
Thanks!
I don’t have EW counts for GDX because it does not have sufficient volume for reliable EW analysis.
For GDX I use resistance / support to identify where bounces may find resistance, and where they may begin at support.
Lara, do you feel this bounce is done or at least close? I’m adding shorts back slowly just would like your input. thank you
https://www.tradingview.com/x/zCOI1Vne/
My hourly chart above answers this question. I don’t think the bounce is yet done, the EW structure is incomplete and the resistance line is not yet met.
thank you, will wait. Took profits for today 🙂
On my charts, we have a breach (although it is blooming close) on the bull hourly.
Too close to call, or enough to call Bear ?
Hi Lara *,
I would also like your thoughts on this please!
Thanks you!
I’m not sure of the time difference, but Lara is pretty regular with her updates …. I am sure we’ll hear from her shortly.
I was up just after 7am, that’s usual 🙂
Afternoon EST is very early morning my time here in New Zealand.
With our daylight savings just begun last weekend NY now closes 9am my time, so I have plenty of time to get updates before the close for you all now.
Bonds have made a pretty massive reversal from their overnight lows. If rates keep falling then I think we’re getting very near a bottom in GC/SI.
I’ll keep building my SI position. Cash silver nearly hit Lara’s downside target overnight.
I can see a scenario where we are in a ii corrective move up followed by lower lows for this C wave.
Lot’s of action right now – keeping an eye on the broader stock indices to see if they can hold support at 2940 and then 2900.