Upwards movement has continued and remains below the invalidation point and within the base channel. Today a bullish signal from On Balance Volume prompts a relabelling of the bullish daily Elliott wave count.
Summary: A new low below 1,485.43 would provide confidence that the downward trend has most likely resumed. The short-term target may be at 1,420.
A new high above 1,534.62 would add confidence to a more bullish outlook. The target would then be at 1,652 or 1,693.
For the bigger picture, 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 base channel on daily and hourly charts about minor waves 1 and 2. Draw the first trend line from the start of minor wave 1 to the end of minor wave 2, then place a parallel copy on the end of minor wave 1. The upper edge of this channel is reasonably likely to be where price may find resistance if this correction continues to be deeper than expected. Along the way down, minor wave 3 should exhibit enough power to break below support at the lower edge of the base channel.
Gold usually fits within base channels at the start of new movements but not always. Occasionally second wave corrections can be deep and time consuming and can breach base channels.
HOURLY CHART
Minor wave 3 may only subdivide as an impulse. Within the impulse, minute wave i may be complete. Minute wave ii may not move beyond the start of minute wave i above 1,534.54.
The next area of resistance is the upper edge of the base channel, which is copied here from the daily chart.
Minute wave ii now fits perfectly as a complete triple zigzag. The maximum number of corrective structures in a multiple is three. If this correction is correctly labelled, then it should be over here.
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.
Add the wide best fit channel to weekly and daily charts.
DAILY CHART
Today primary wave 4 is labelled as possibly complete. The structure still fits as a flat correction, but it may be complete as a regular flat. Within the flat, intermediate wave (B) may fit as a double combination: flat – X – zigzag. Intermediate wave (C) has moved below the end of intermediate wave (A) avoiding a truncation and a very rare running flat.
Primary wave 2 lasted 43 sessions. Primary wave 4 may have been over in 35 sessions, one longer than a Fibonacci 34.
It is also possible that primary wave 4 may be incomplete and may continue lower. Primary wave 4 may not move into primary wave 1 price territory below 1,346.45.
HOURLY CHART
Intermediate wave (C) may have been a complete impulse over at the last low.
Primary wave 5 must subdivide as a five wave impulse. Within primary wave 5, intermediate wave (1) may be incomplete.
Within intermediate wave (1), minor wave 4 may not move into minor wave 1 price territory below 1,485.43.
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). The new daily chart for the bullish wave count today, which sees the correction of primary wave 4 as complete, does not have support from this weekly chart.
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.
Price today moved back into the flag pattern. It no longer looks correct, so it is removed.
There is a series of two lower swing highs and two lower swing lows so far from the high on the 4th of September. The short-term volume profile remains bullish.
The bullish signal today from On Balance Volume supports the new labelling on the bullish daily Elliott wave chart, and is one reason for this relabelling.
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.
For the short term, today GDX still looks less bullish than Gold.
Published @ 06:50 p.m. EST.
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New updates to this analysis are in bold.
hourly bear chart updated
because the last little piece I have labelled minuette (b) looks so strongly like a three, it looks like the high for minute ii is not yet in. it looks like it may have one more high to come up and test resistance at the upper edge of the base channel on Monday
I have drawn a small channel about minute ii. if this upwards sloping channel is breached by downwards movement on Monday then you may assume my labelling of minute ii may be wrong and it may be over
but while price remains now within that upwards sloping channel, assume it will continue to make a final high to complete minute ii at the upper edge of the downwards sloping base channel which is copied over from the daily chart
sorry guys, I know that’s not what some of you want to hear
but Gold does like to exhibit very deep and time consuming second wave corrections at the start of a new move
tiny correction to my labelling: within minuette (b) of minute ii, subminuette b needs to be moved over to the right
that chart was quickly labelled and not perfected, to get it out as quick as I can before NY closes for Friday.
thank you!
Went flat for the weekend, will reenter when it’s clearer. Have a great weekend
You’re very welcome.
Daylight savings here in NZ makes it so much easier for me to be here in time for you in my mornings. And it’s important I can get one coffee into me before I post any charts 🙂
We really appreciate you trying to inform us before 4pm!
I could see SPX pullback on Monday after today’s strong rally, pushing gold a bit higher first.
I’d rather not think about it anymore this week. Having said that, I’m looking forward to your weekend update 🙂
hourly bull chart updated
I’m not seeing a catalyst for a down move. Non farm payrolls seems to be kind of a mixed bag.
Small degree triangle then down?
now sure what to make of it, but a larger wave down “should” happen today at some point if my count is correct? Powell speaks at 2pm EST so maybe that’s the catalyst.
I’ll be happier when its under 1485
This
Thank god!!!!!!!!!!
Big day 😬
My fault for going too big, but I really need this to come down … And the talk of more bull is concerning.
What’s everyone’s bias ?
considering the hammer candle yesterday on SPX and Oil, I’m thinking yesterday was a reversal for both. GDX also looks bearish to me so I’m leaning bearish on gold/gdx. We’ll find out soon – good luck!
Looking good – low unemployment most likely no rate cut for now