GOLD: Elliott Wave and Technical Analysis | Charts – March 25, 2020
Summary: The bounce may have ended yesterday, or it may end tomorrow.
Thereafter, the downwards trend may resume.
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 a complete 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 has now closed back below the upper edge of this channel.
DAILY CHART
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Super Cycle wave (b) may be complete.
The second zigzag in the double, labelled cycle wave y, may be complete. There is no Fibonacci ratio between primary waves A and C.
If there was a trend change at Super Cycle degree, then a five down should develop at daily, weekly and monthly time frames. The first five down at the daily chart level will be labelled intermediate wave (1), and it may be incomplete. Within intermediate wave (1), minor wave 1 may now be complete and minor wave 2 may not move beyond the start of minor wave 1 above 1,701.61.
For Gold, the first second wave correction within a new trend is often very deep. So far minor wave 2 fits this expectation.
HOURLY CHART
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Minor wave 2 may be subdividing as a single zigzag.
Minor wave 2 may end now with a very slight new high.
Within minute wave c, minuette waves (i) through to (iv) may be complete. Within minuette wave (v), subminuette wave iv may not move into subminuette wave i below 1,598.40. A breach of this invalidation point (without new highs first) would be an early indication that minor wave 2 may be over.
Minor wave 2 may not move beyond the start of minor wave 1 above 1,701.61.
Draw a best fit channel about minor wave 2. A breach of this channel by downwards movement would be a strong indication that minor wave 2 should be over and minor wave 3 should then be underway.
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 complete. Cycle wave IV may not move into cycle wave I price territory below 1,303.51.
DAILY CHART
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Cycle wave III may be complete. Cycle wave IV may not move into cycle wave I price territory below 1,303.51.
Cycle wave II was relatively deep at 0.55 of cycle wave I. If cycle wave IV exhibits alternation in depth, it may more likely be shallow; the first target at 0.382 of cycle wave III would be preferred.
Cycle wave II was a very long lasting double combination. It lasted 119 weeks. Cycle wave IV may most likely be a zigzag, which tend to be quicker structures, but it would still be expected to last several months.
HOURLY CHART
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Primary wave B may subdivide as any corrective Elliott wave structure, including a triangle. Primary wave B may not move beyond the start of primary wave A above 1,701.61.
Both hourly charts now label this bounce as a single zigzag. The channel is the same and should be used in the same way.
TECHNICAL ANALYSIS
WEEKLY CHART
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The Bearish Engulfing pattern is extreme. The pattern fully engulfs the prior nine weekly candlesticks, and it has some support from volume. This strongly indicates a trend change after the upwards trend reached very extreme and conditions reached overbought and exhibited bearish divergence.
Price does not move in straight lines. Look out for bounces and consolidations on the way down. Price is currently moving sideways above support about 1,450 to 1,455. Below that is very strong support about 1,375.
A decline in volume last week and a slightly long lower wick suggest sideways movement may continue further or a bounce may develop.
DAILY CHART
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Two bearish long upper wicks, a strong decline today for an upwards session, and a bearish candlestick reversal pattern are together a warning that this bounce may be over.
GDX WEEKLY CHART
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GDX is a reasonable distance off new highs. The last signal was very bearish from a strong Bearish Engulfing pattern.
There is support below in a zone about 16.75 to 15.85. Price has bounced up strongly again within this zone.
The last weekly candlestick suggests more downwards movement next week with a bearish long upper wick, but this is contradicted by a weak bullish signal from On Balance Volume. This week is inconclusive.
GDX DAILY CHART
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There has been a trend change to downwards. This trend has support from volume pushing price lower and exhibits strength in increasing ATR.
The 55 day moving average has crossed below the 200 day moving average. This is fairly bearish.
A target from the flag pattern would be 33.58. But the pattern is not a strong one, so the target may not be met.
Upwards movement out of the flag now lacks support from volume and has a smaller range. This may be a counter trend movement.
Published @ 06:55 p.m. EST.
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New updates to this analysis are in bold.