GOLD: Elliott Wave and Technical Analysis | Charts – February 26, 2020

A sideways day leaves both Elliott wave counts essentially the same. A small range real body on today’s candlesticks, with long upper and lower wicks, indicates a balance of bulls and bears and indecision.

Summary: Targets for a final high are either 1,693 (bear count) or 1,834 (bull count).

Conditions are now very extreme; a blow off top may possibly be complete today or one final high may yet be required in the next very few days.

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 be an incomplete 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 wide best fit channel is added in light blue. Copy this channel over to daily charts. Price is now above the upper edge of this channel, which may now provide some support.

DAILY CHART

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Super Cycle wave (b) may be close to completion. It may end this week.

Within the zigzag of cycle wave y, primary waves A and B may be complete and primary wave C must subdivide as a five wave structure. Primary wave C may be an impulse that may now be close to completion.

Intermediate wave (4) may have subdivided as a zigzag lasting 4 sessions. This has good proportion with the zigzag of intermediate wave (2), which lasted 8 sessions. Intermediate wave (5) may be an incomplete impulse that requires one final high. Within the impulse of intermediate wave (5), minor wave 4 may not move into minor wave 1 price territory below 1,590.31.

A target is calculated for primary wave C to end.

Draw a best fit channel about intermediate wave (5): draw the first trend line from the ends of minor waves 1 to 3, then pull a parallel copy down to contain all of intermediate wave (5) so far. If minor wave 4 continues any lower, then it may find support about the lower edge of this channel. Copy the channel over to the hourly chart.

HOURLY CHART

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Intermediate wave (5) must subdivide as a five wave structure, most likely an impulse. Within the impulse, so far minor waves 1 through to 4 may be complete. Minor wave 4 may have continued lower today as a double zigzag.

Minor wave 4 may not move into minor wave 1 price territory below 1,590.31.

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 on 3 December 2015.

If Gold is in a new bull market, then it should begin with a five wave structure upwards on the weekly chart.

Cycle wave I fits as a five wave impulse with reasonably proportionate corrections for primary waves 2 and 4. This resolves a previous major problem with the bullish wave count.

Cycle wave II now fits as a double flat. However, a problem arises with the relabelling of this structure. Within the first flat correction labelled primary wave W, this wave count now needs to ignore what looks like an obvious triangle from July to September 2016 (this can be seen labelled as a triangle on the bear wave count above). This movement must now be labelled as a series of overlapping first and second waves.

Within the first flat correction labelled primary wave W of the double flat of cycle wave II, intermediate wave (B) is 1.69 the length of intermediate wave (A). This is longer than the common range of up to 1.38, but within an allowable guideline of up to 2. The length of intermediate wave (B) reduces the probability of this wave count.

Cycle wave III may be incomplete. A target is calculated based upon a common Fibonacci ratio for cycle wave III to cycle wave I.

Add the wide best fit channel to weekly and daily charts.

DAILY CHART

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Cycle wave III may be an incomplete impulse. Within the impulse, primary waves 1 through to 4 may be complete and primary wave 5 may be an incomplete impulse.

This bullish wave count considers the possibility that intermediate wave (4) was a triangle. This labelling would also still work for the bearish wave count.

Within primary wave 5, intermediate waves (1) through to (4) may be incomplete. Within intermediate wave (5), minor wave 4 may not move into minor wave 1 price territory below 1,584.50.

HOURLY CHART

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Hourly charts are labelled differently to look at intermediate wave (5) in two different ways.

Redraw a channel about intermediate wave (5) using Elliott’s second technique: draw the first trend line from the ends of minor waves 2 to 4, then place a parallel copy on the end of minor wave 3. Minor wave 5 may end about the upper edge of this channel.

TECHNICAL ANALYSIS

WEEKLY CHART

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Bullish divergence between price and On Balance Volume has now been followed by upwards movement from price to new highs. This divergence may now be resolved.

The trend is very extreme and RSI is overbought. This trend may be expected to end fairly soon, although extreme conditions can persist for another one to very few weeks.

DAILY CHART

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Conditions are very extreme at both weekly and daily time frames. ADX is very extreme. RSI had reached overbought at the high.

A blow off top is forming. These can unfold over a few days; they are not necessarily single day events. There is a good example on this chart from 3rd to 8th January 2020. This one so far lasted two days; it may now be over or it may still have one final high before it is complete. There is no bearish candlestick reversal pattern at the high.

GDX WEEKLY CHART

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While Gold has made new highs, GDX has not by a very small margin.

The week has closed strongly suggesting more upwards movement next week. Some weakness is evident in bearish divergence with RSI and overall declining volume, although the last week was stronger than the week prior.

GDX DAILY CHART

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A breakaway gap may now offer support at 30.10. A target calculated from the gap and using the prior consolidation is at 32.37.

The breakaway gap is now closed with a new low below 30.10. It is renamed an exhaustion gap and a trend change may be indicated.

While the three daily candlesticks about the last high are not correctly a reversal pattern (the second candlestick is too large to be part of an Evening Doji Star), the close on the third candlestick well below the prior session of the 21st of February is very bearish.

Published @ 05:45 p.m. EST.

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New updates to this analysis are in bold.

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