Price remains within the pennant trend lines and below resistance. All three Elliott wave counts remain valid.
Today volume suggests the bearish alternate or bullish wave counts may be more likely.
Summary: A new low below 1,456.64 would provide confidence that the downward trend has resumed. The short-term target may be at 1,420 (Elliott wave) or 1,407 (from the pennant pattern). The main Elliott wave count still expects a downwards breakout soon.
A new high above 1,515.58 would add confidence to a more bullish outlook at least for the short term. The target would then be at 1,567, 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 already, or may begin after one more high. 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 has completed and the upwards trend has resumed.
Grand SuperCycle analysis is here.
Monthly charts were last published 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
Cycle wave y may be a complete zigzag. Within both of primary waves A and C, there is good proportion between intermediate waves (2) and (4). Within both of primary waves A and C, there is good alternation in structure of intermediate waves (2) and (4).
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 almost where price is currently finding resistance. At the close of this session, price is almost right on the upper edge of this trend channel. If price continues higher tomorrow and clearly closes above the upper edge of the channel, then this main bearish wave count would be swapped over with the alternate bearish wave count below.
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 minor wave 3, minute waves i and ii may be complete.
Minute wave iii may only subdivide as an impulse. Within minute wave iii, minuette wave (ii) may now be complete as a double zigzag. The second zigzag in the double may have ended almost right on the upper edge of the base channel.
Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,515.58.
A new low below 1,456.64 would be a downwards breakout. At that stage, the bullish wave count below would reduce in probability and some confidence may be had in this main bearish wave count.
A new high above 1,515.58 would see this main bearish wave count swapped over with the alternate bearish wave count below.
ALTERNATE DAILY CHART
This wave count exactly follows the expected pathway for Silver. If your own analysis suggests these markets should move together (although the correlation co-efficient shows they do not always do so), then this may be your preferred Elliott wave count.
It is possible that the double zigzag for Super Cycle wave (b) may be incomplete and may yet require one more high. A target is calculated for primary wave C that expects resistance at the upper edge of the light blue best fit channel to continue.
Within cycle wave y, primary wave A may have been over at the last high. Primary wave B may now be a complete zigzag. Primary wave C may have begun. Within primary wave C, intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,456.64.
A channel is drawn about cycle wave y using Elliott’s technique for a correction. At this stage, the lower edge of this channel should provide strong support for pullbacks within primary wave C. If this channel is breached by downwards movement, then the probability of this wave count would reduce substantially. At this stage, the lower edge of this channel is showing where support has been found for the last few sessions.
It is possible to move the degree of labelling within intermediate wave (B) down one degree; intermediate wave (B) may still continue lower as a double zigzag. Within the double, wave X may be completing as a regular contracting triangle. The breakout would be expected to be downwards out of the triangle. If intermediate wave (B) continues lower, it would still have good proportion to intermediate wave (A). Intermediate wave (B) may not move beyond the start of intermediate wave (A) below 1,266.61.
ALTERNATE HOURLY CHART
This hourly chart shows all movement from the end of intermediate wave (2).
Intermediate wave (3) may only subdivide as an impulse. Within the impulse, minor waves 1 and 2 may be complete. Minor wave 3 may have begun, and it too may only subdivide as an impulse.
Within minor wave 3, minute wave i may be incomplete. Within minute wave i, minuette wave (iv) may not move into minuette wave (i) price territory below 1,495.07.
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 62 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
Primary wave 4 is possibly complete. The structure now fits as a zigzag. It is possible that primary wave 4 could continue lower as a double zigzag. However, if primary wave 4 did continue lower, it may become longer in duration to primary wave 2. The proportion may not look good. This wave count would look best if primary wave 4 is over as labelled.
Primary wave 2 lasted 43 sessions. Primary wave 4 may have been over in 19 sessions. Gold’s fourth waves are often more brief in duration than its second waves; this part of the wave count has the right look.
Primary wave 4 may not move into primary wave 1 price territory below 1,346.45.
HOURLY CHART
Primary wave 4 may be complete and primary wave 5 upwards may be underway. Primary wave 5 may subdivide either as an impulse or an ending diagonal. An impulse is much more likely.
Within the impulse, intermediate waves (1) and (2) may be complete.
Intermediate wave (3) may have begun. Within intermediate wave (3), minor waves 1 and 2 may be complete.
Because the targets for this bullish wave count are higher than the bearish alternate, the degree of labelling within minute wave i is moved down one degree. Minute wave i may be an incomplete impulse, and within that impulse minuette wave (i) may be incomplete.
Within minuette wave (i), subminuette wave iv may not move into subminuette wave i price territory below 1,495.07.
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.
This pullback has brought RSI and Stochastics down from overbought and ADX down from very extreme. It looks like a high may be in place for Gold, but it is also possible that one final high may yet be seen before a major trend change.
Last week a small range inside week leaves this view unchanged.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Since the last high on the 4th of September, there has been a new swing low (on the 30th of September) and now a series of (so far) two lower swing lows and two lower swing highs. In conjunction with a very strong Bearish Engulfing pattern on the 5th of September and the prior upwards trend reaching very extreme, it looks like Gold may have had a trend change.
The possible pennant pattern has now lasted 16 sessions. The best performing pennants and flags complete within 15 sessions. This one is now longer in duration by one session, so it may be expected that this pattern is now less likely to perform well.
Price remains range bound and within the pennant trend lines. There has been no breakout yet. Some support from volume, a relatively long lower wick, and a close near the high for the last session indicate more upwards movement tomorrow.
GDX WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
For the very short term, a decline in volume and a long lower wick last week suggest a bounce this week.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
There is now a series of three lower highs and three lower lows from the high on the 4th of September. It still looks like GDX may have had a trend change. This view should remain dominant while the last swing high at 28.38 on the 8th of October remains intact.
For the very short term, another upwards day may be expected tomorrow. A little support from volume and a close near the high for the session is bullish short term.
Published @ 08:26 p.m. EST.
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New updates to this analysis are in bold.
The main bear count is invalidated at the hourly chart level and the base channel is breached.
The alternate bear count is the new main wave count today.
The bullish count also remains valid.
One down, two left.
I need to fix that chart to show minute ii as incomplete, expect it to keep going down towards the 0.618 Fibonacci Ratio
Might have been a false breakdown on the dollar
https://www.tradingview.com/x/LXWC2k5W/
Its dropping like a rock. Lara I love you. ❤️
“Within minute wave i, minuette wave (iv) may not move into minuette wave (i) price territory below 1,495.07.” If that breaks, then what is the count?
Not sure if it reached the invalidation point. Gold price varies from place to place.
This ^^^^^^
with the markets breaking up it could very well be a bull trap on gold, i don’t know right now. Just going to wait.
It did on hourly. Bar chart 1516.65. That is what Lara goes by.
Thanks – this dump does look like a pull back / profit taking ahead of the weekend – although the daily might be scary come Monday
IMO retest of base channel. Buying op imho.
well there’s the breakout !