GOLD: Elliott Wave and Technical Analysis | Charts – January 6, 2020
The target at 1,564 to 1,565 was inadequate, but upwards movement has continued exactly as both Elliott wave counts expected. Today a candlestick pattern suggests the next movement.
Summary: A consolidation to last about two weeks and find support at the lower edge of the Elliott channel on daily charts is now expected. Thereafter, more upwards movement may be a final thrust before a bear market resumes.
Grand SuperCycle analysis is here.
Monthly charts were last updated here.
BEARISH ELLIOTT WAVE COUNT
WEEKLY CHART
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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 1,374.91 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. Today the upper edge of the channel has provided strong resistance.
DAILY CHART
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The double zigzag for Super Cycle wave (b) is incomplete.
Within cycle wave y, primary waves A and B are complete. Primary wave C must complete as a five wave structure. It is unfolding as an impulse. Within the impulse, intermediate waves (1) to (3) may now be complete.
Intermediate wave (2) was a deep 0.79 zigzag, which lasted 8 sessions. Given the guideline of alternation, intermediate wave (4) would least likely unfold as a zigzag and most likely unfold as either a flat, combination or triangle. Intermediate wave (4) would most likely be shallow. It may last about a Fibonacci 5 or 8 sessions.
Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,473.35.
Drawn an Elliott channel about primary wave C. The lower edge may provide support to intermediate wave (4). Copy this channel over to hourly charts.
HOURLY CHART
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Intermediate wave (4) would most likely unfold as one of either a flat, combination or triangle. Within all these corrective structures, the first wave down would subdivide as a three, most likely a zigzag. Within this wave down, no second wave correction nor B wave may move beyond the start above 1,579.02.
When a zigzag down may be complete, then the upper invalidation point would no longer apply. If intermediate wave (4) unfolds as any one of an expanded flat, running triangle or combination, then within it minor wave B or X may make a new price extreme beyond the start of minor wave A or W.
BULLISH ELLIOTT WAVE COUNT
WEEKLY CHART
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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 through to 4 may now be complete. Primary wave 5 may be complete at any stage now; this would complete the whole structure of cycle wave III. Cycle wave IV may not move into cycle wave I price territory below 1,374.91.
Add the wide best fit channel to weekly and daily charts.
DAILY CHART
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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 waves (1) through to (3) may now be complete. Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,473.35.
Draw an Elliott channel about primary wave 5. Intermediate wave (4) may find support at the lower edge.
This wave count for the next few weeks remains essentially the same as the main bearish wave count. Both wave counts are seeing a fourth wave unfold, to then be followed by a final fifth wave up.
HOURLY CHART
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Hourly charts for the main bearish and this bullish wave count are the same.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Upwards movement continues. A bullish signal from On Balance Volume and some support last week from volume suggest upwards movement may continue futher to resistance above at 1,565.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The Shooting Star pattern is a bearish candlestick reversal pattern. This one is fairly strong with a very long upper wick. As it comes while RSI is reasonably overbought, it should be given weight. A blow off top may now be complete and some consolidation or pullback, if not a full trend change, is a reasonable expectation.
GDX WEEKLY CHART
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A shooting star with declining volume last week suggests a consolidation may develop here for GDX.
Friday saw price move very strongly higher for Gold but overall lower for GDX. This is a perfect illustration of the lack of positive correlation between these two markets and why it is dangerous to assume that they must move in the same direction. The correlation co-efficient is added to the bottom of this chart to illustrate the data shows that any correlation that these two markets may have is unreliable.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
For the short term, GDX is bearish. It may move lower this week. Look for support about 28.24.
Published @ 06:38 p.m. EST.
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New updates to this analysis are in bold.
Up up and away! Looks like the expanded triangle in the gdx and gdxj is playing out.
I’d rather see this as the end of a third wave, it’s too powerful to really look like a triangle.
Hourly chart updated:
If I have the last downwards wave correctly labelled as a five, then the current little upwards wave should be a three and may not move beyond the start of the five.
Because whether the five is labelled as an A or 1st wave the rule is the same. Wave B (following wave A) or wave 2 (following wave 1) may not move make a new price extreme above 1,579.02.
I’m travelling from Dunedin to the Catlins today. Which is IMO one of the most beautiful and pristine spots in my country, also one of the most remote. Will post a couple of pics later.
Roadtrips! love them.
Looking forward to the pics . I was in no for a few weeks . I hope to go back…I need more places to visit with my friends there. Tongoriro crossing was awesome. I have an aunt in Dunedin if you get stuck
Could we be dealing with a triangle instead of a zig-zag?
I think the idea is now defunct, Gold is shooting up higher. The third wave is incomplete.