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GOLD: Elliott Wave and Technical Analysis | Charts – December 26, 2019

by | Dec 26, 2019 | Gold | 5 comments

On the 24th of December On Balance Volume gave a bullish signal with a break above strong resistance. The bearish alternate wave count is now the main wave count. Short-term targets are calculated.

Summary: The main wave count now expects overall upwards movement for a few weeks to either end about 1,559 or to find resistance again at the upper edge of the blue channel on weekly and daily charts. A short-term target at 1,522 may see a pullback or consolidation develop.

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 updated here.

BEARISH ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly 2019
Click chart to enlarge.

Super Cycle wave (b) may still be an incomplete double zigzag, requiring one more high.

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.

After the structure of cycle wave y may be complete, then 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. At that stage, targets for Super Cycle wave (c) would be calculated.

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. If the target is wrong, it may not be quite high enough. Upwards movement may end if price comes up to touch the upper edge of the channel.

DAILY CHART

Gold Elliott Wave Chart Daily 2019
Click chart to enlarge.

It is possible that the double zigzag for Super Cycle wave (b) may be incomplete and may yet require one more high.

Within cycle wave y, primary wave A may have been over at the last high.

Primary wave B may be complete as a single zigzag. Within the zigzag, intermediate wave (C) is just 3.56 short of equality in length with intermediate wave (A). Intermediate wave (B) is a running contracting triangle.

Primary wave C would be expected to find strong resistance and end at the upper edge of the blue best fit channel copied over from the weekly chart.

Primary wave C must subdivide as a five wave structure. Within primary wave C, so far intermediate waves (1) and (2) may be complete. Intermediate wave (3) may only subdivide as an impulse. The middle of the impulse may be complete. 

One or both of minute wave v and minor wave 5 may end with blow off tops. A further increase in upwards momentum may develop from here.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2019
Click chart to enlarge.

The hourly chart begins at the low labelled minute wave ii,  which may also be seen on the daily chart.

Within the middle of the impulse, minuette wave (iv) may not  move into minuette wave (i) price territory below 1,479.91.

ALTERNATE DAILY CHART

Gold Elliott Wave Chart Daily 2019
Click chart to enlarge.

This wave count remains valid while price remains below 1,514.24. Minuette wave (ii) may not move beyond the start of minuette wave (i).

Cycle wave y may be a complete zigzag.

If there has been a trend change at Super Cycle degree, then a five down needs to develop on the daily and weekly charts. So far that is incomplete. It will be labelled intermediate wave (1).

Typically, Gold begins new trends slowly with overlapping first and second waves, and then momentum builds through the middle of the third wave and may explode at the end of third waves.

BULLISH ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly 2019
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, which is one reason why the bearish wave count is preferred 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 71 weeks. It exhibits some support from volume and increasing ATR. This wave count 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

Gold Elliott Wave Chart Daily 2019
Click chart to enlarge.

Primary wave 4 may be complete as a single zigzag. Primary wave 4 may have lasted 49 sessions, just six more than primary wave 2, which lasted 43 sessions. The proportion remains very good for this part of the wave count.

A target for cycle wave III is calculated also now at primary degree. If price reaches the first target and keeps rising, then the second higher target may be used.

Primary wave 5 may only subdivide as a five wave structure, most likely an impulse. Within primary wave 5, intermediate wave (3) may only subdivide as an impulse.

Within the impulse of intermediate wave (3), minor wave 4 may not move into minor wave 1 price territory below 1,483.37.

At this stage, this bullish Elliott wave count is  essentially the same as the main bearish Elliott wave count in that both expect more upwards movement to new highs. The structure unfolding is the same, the degree of labelling is the same, and for the short term hourly charts are the same. Targets are different.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2019
Click chart to enlarge.

Hourly charts for the main bearish and this bullish wave count are the same, with the exception of targets which are different.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2019
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.

A very strong downwards week with strong support from volume seven weeks ago supports a bearish view.

Since the high in early September, volume offers more support to downwards movement than upwards. The last six weeks of choppy overlapping upwards movement are unconvincing as a new trend and look more like a counter trend movement.

DAILY CHART

Gold Daily 2019
Click chart to enlarge. Chart courtesy of StockCharts.com.

Since the last high on the 4th of September, there is now a series of three swing lows and swing highs. The last swing high at 1,519 on the 1st of November so far remains intact. If price makes a new high above this point, then the downwards trend from the 4th of September may have ended.

The signal  from On Balance Volume is strong because the trend line breached was tested multiple times, had a shallow slope and was long held. For this reason the bearish Elliott wave counts are today swapped over.

GDX WEEKLY CHART

GDX Weekly 2019
Click chart to enlarge. Chart courtesy of StockCharts.com.

GDX, like Gold, often begins a new trend slowly with overlapping and flat or declining ATR. From the last major high at 30.96 a few weeks ago, there has been a strong Bearish Engulfing pattern and strong downwards weeks with greater range and volume than upwards weeks. GDX may have had a trend change. However, bullish divergence between price and On Balance Volume is strong and persistent; it contradicts the view of a trend change.

The short term after last week is inconclusive. Volume has not pushed price lower.

GDX DAILY CHART

GDX Daily 2019
Click chart to enlarge. Chart courtesy of StockCharts.com.

The last swing high at 28.18 on the 31st of October was breached on the 24th of December. At that stage, the series of swing lows and swing highs was broken and a trend change was more likely.

A short-term target calculated from the measuring gap is at 29.52.

Published @ 10:00 p.m. EST.


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New updates to this analysis are in bold.

Comments

5 Comments

  1. Bear hourly chart updated.

  2. My gold feed shows a high of 1515.32, not sure if the alternate daily was invalidated on other feeds.

    • BarChart shows a high at 1,514.49, so yes, it’s invalidated.

      • Does that mean Gold to 1600? Which chart should we be following now?

        • The bearish alternate in the analysis here is now the main wave count. Target 1,559.