Select Page

GOLD: Elliott Wave and Technical Analysis | Charts – September 4, 2020

by | Sep 4, 2020 | Gold

A triangle pattern may be complete at today’s low.

Summary: The pullback may be over. The upwards trend may resume.

The next target is now at 2,180.

A new low below 1,764.12 at any time frame would invalidate the first daily chart and add confidence in an alternate daily chart. At that stage, a sustainable high would be in place and either a cycle degree fourth wave or a Super Cycle degree C wave down may be underway.

Grand SuperCycle analysis is here.

Last analysis of monthly charts is here with video here.

FIRST ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly 2020
Click chart to enlarge.

The bigger picture for this first Elliott wave count sees Gold as still within a bear market, in a three steps back pattern that is labelled Grand Super Cycle wave IV on monthly charts. The common range for Super Cycle wave (b) is from 1 to 1.38 times the length of Super cycle wave (a), giving a range from 1,920.18 to 2,252.27. The target would see Super Cycle wave (b) end within this most common range.

Super Cycle wave (b) within Grand Super Cycle wave IV may be an incomplete double zigzag. When Super Cycle wave (b) may be complete, then this wave count expects Super Cycle wave (c) to begin and to move price below the end of Super Cycle wave (a) at 1,046.27.

The first zigzag in the double is labelled cycle wave w. The double is joined by a three in the opposite direction, a combination 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.

Primary wave C within cycle wave y may be subdividing as an impulse. Intermediate waves (1) through to (4) within primary wave C may be complete. If it continues any lower, then intermediate wave (4) may not move into intermediate wave (1) price territory below 1,764.12.

We should always assume the trend remains the same until proven otherwise. At this stage, Gold is in a bull market.

DAILY CHART

Gold Elliott Wave Chart Daily 2020
Click chart to enlarge.

The daily chart shows detail of primary wave C as an incomplete impulse.

Intermediate waves (1) through to (4) within primary wave C may be complete. It is also possible that intermediate wave (4) may end at today’s low as a triangle (alternate hourly chart below).

If it continues lower, then intermediate wave (4) may not move into intermediate wave (1) price territory below 1,764.12.

Draw an Elliott channel: draw a first trend line from the end of intermediate wave (1) to the end of intermediate wave (3), then place a parallel copy on the end of intermediate wave (2). Intermediate wave (4) may have overshot the lower edge.

Intermediate wave (2) was a shallow double zigzag, lasting 15 sessions. Intermediate wave (4) may be complete as a deeper and quicker single zigzag. Fourth waves are most often more brief than their counterpart second wave corrections for this market, so it would look normal for intermediate wave (4) to be over here.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2020
Click chart to enlarge.

Intermediate wave (4) may be complete as a relatively quick zigzag.

Intermediate wave (5) may have begun. Intermediate wave (5) may continue for a few more weeks, and it may exhibit a slowing of momentum from intermediate wave (3).

Minor waves 1 and 2 within intermediate wave (5) may now be complete.

Minor wave 3 may only subdivide as an impulse. The target for minor wave 3 to end is based upon a common Fibonacci ratio to minor wave 1.

Minute waves i and ii within minor wave 3 may be complete. Minute wave iii may only subdivide as an impulse. Minuette wave (ii) within minute wave iii may not move beyond the start of minuette wave (i) below 1,916.95. Minuette wave (ii) may be complete as an expanded flat correction.

ALTERNATE HOURLY CHART

Gold Elliott Wave Chart Hourly 2020
Click chart to enlarge.

Intermediate wave (4) may be complete today as a triangle. Minor wave E may have moved lower today to slightly overshoot the A-C trend line.

If it continues lower, then minor wave E may not move beyond the end of minor wave C below 1,903.83.

ALTERNATE DAILY CHART

Gold Elliott Wave Chart Daily 2020
Click chart to enlarge.

It is also possible that a Super Cycle degree trend change has occurred at the last high. However, we should always assume the trend remains the same until proven otherwise. Assume the upwards trend remains in place and the main wave count is correct until the upwards trend is invalidated with a new low below 1,764.12. At that stage, this would become the main wave count.

Super Cycle wave (c) would be likely to make at least a slight new low below the end of Super Cycle wave (a) at 1,046.27 to avoid a truncation. If price provides confidence in this wave count with a new low below 1,764.12, then a target would be calculated for Super Cycle wave (c) to end.

SECOND ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly 2020
Click chart to enlarge.

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.

Cycle wave II fits as a double flat. However, within the first flat correction labelled primary wave W, this wave count 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 be labelled as a series of overlapping first and second waves. Ignoring this triangle reduces the probability of this wave count in Elliott wave terms.

Cycle wave III may be incomplete. Cycle wave IV may not move into cycle wave I price territory below 1,303.51.

DAILY CHART

Gold Elliott Wave Chart Daily 2020
Click chart to enlarge.

Cycle wave III may be continuing higher. The daily chart focusses on primary wave 5 within cycle wave III.

Draw an Elliott channel about intermediate wave (3): draw the first trend line from the end of minor wave 1 to the end of minor wave 3, then place a parallel copy on the end of minor wave 2. Minor wave 4 may have overshot the lower edge of the channel.

If minor wave 4 continues lower, then it may not move into minor wave 1 price territory below 1,764.12.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2020
Click chart to enlarge.

Minor wave 5 must subdivide as a five wave structure. Minute wave ii within minor wave 5 may be a complete double zigzag. Minute wave iii may only subdivide as an impulse. Minuette waves (i) and (ii) within minute wave iii may be complete. Subminuette wave ii within minuette wave (iii) may not move beyond the start of subminuette wave i below 1,916.95.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2020
Click chart to enlarge. Chart courtesy of StockCharts.com.

The upwards trend reached very extreme and RSI reached overbought. A Shooting Star and a Bearish Engulfing candlestick pattern appear at the high. Given extreme conditions, these bearish reversal patterns should be given weight; this would support the alternate daily chart. However, it is still possible that further highs may be made before a more time consuming pullback or a 180° trend change may occur.

So far sideways movement of the last 3 weeks has brought RSI down from extreme, but not by much. ADX remains high. If the upwards trend continues here, it may be limited.

DAILY CHART

Gold Daily 2020
Click chart to enlarge. Chart courtesy of StockCharts.com.

Sideways movement of the last two weeks has brought ADX and RSI down from extreme. There is again room for a trend to develop.

A triangle may be forming. The lower trend line is slightly adjusted today. While Elliott wave triangles are always continuation patterns, classic triangle patterns may be either continuation or reversal patterns. A breakout of either triangle trend line is required before a target can be calculated. An upwards breakout requires support from volume while a downwards breakout does not. The short-term volume profile suggests a downwards breakout may be slightly more likely than upwards.

A breakout is defined as a close below or above triangle trend lines.

Price at the end of the week is at support, and On Balance Volume is at support. Upwards movement may be expected as likely for Monday.

GDX WEEKLY CHART

GDX Weekly 2020
Click chart to enlarge. Chart courtesy of StockCharts.com.

Now two bearish candlestick reversal patterns in a Shooting Star and a Bearish Engulfing pattern indicate a trend change. With RSI reaching overbought at the high, these signals should be given weight. A trend change may be either a 180° change or a change to a sideways consolidation. So far it looks like a sideways consolidation may be forming.

GDX DAILY CHART

GDX Daily 2020
Click chart to enlarge. Chart courtesy of StockCharts.com.

A triangle may be forming. A breakout either upwards or downwards is required before a target can be calculated. An upwards breakout requires support from volume for confidence.

Published @ 06:55 p.m. ET.

Careful risk management protects your trading account(s).

Follow my two Golden Rules:

1. Always trade with stops.

2. Risk only 1-5% of equity on any one trade.

New updates to this analysis are in bold.

Comments