While upwards movement remains below the short-term invalidation point, the movement is now too large to be considered a fourth wave.

The degree of labelling for the last wave down is moved down one degree. This bounce looks like a second wave correction.

Summary: The first wave count is bearish for the bigger picture, and it has a main and an alternate daily chart. The main daily chart expects a multi-year bear market may be in its early stages to end below 1,046. Short-term targets are at 1,772 then 1,767 and then at 1,709. A long term target is at 657. The alternate daily chart has a low probability and would be invalidated below 1,764.12.

The second wave count is bullish for the bigger picture. It expects a multi-month to multi-year pullback or consolidation (within a larger bull market) may be in its early stages to possibly end about either 1,722.96 or 1,508.27.

Grand SuperCycle analysis is here.

Last analysis of monthly charts is here.

FIRST ELLIOTT WAVE COUNT

WEEKLY CHART

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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. Grand Super Cycle wave IV may be subdividing as an expanded flat pattern.

Super Cycle wave (b) within Grand Super Cycle wave IV may be a complete double zigzag. 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 target calculated expects a common Fibonacci ratio for Super Cycle wave (c).

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.

A best fit channel is drawn about primary wave C to contain as much of this movement as possible. Copy this channel over to daily charts. This channel is now clearly breached, which suggests the upwards wave labelled cycle wave y may be over.

DAILY CHART

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Within a new bear market, primary wave 1 may be an incomplete five wave impulse.

Primary wave 2 within the new downwards trend may not move beyond the start of primary wave 1 above 2,070.48.

Gold typically exhibits extended and strong fifth waves; this tendency is especially prevalent for fifth waves to end third wave impulses one degree higher. One or more of minuette wave (v), minute wave v and minor wave 5 may exhibit this tendency; there may be one or more selling climaxes along the way down. Minute wave iv and minor wave 4 may be relatively brief and shallow.

Draw an acceleration channel about downwards movement and keep redrawing the channel as price continues lower. Draw the first trend line from the end of intermediate wave (1) to the last low, then place a parallel copy on the end of intermediate wave (2). When intermediate wave (3) may be complete, then this channel would be drawn using Elliott’s technique about primary wave 1.

Today the degree of labelling within downwards movement from the high labelled minute wave ii is moved down one degree, and slightly adjusted to see another complete wave at the last low. The size of the bounce over the last two days looks too big to be minuette wave (iv) within minute wave iii and looks more like another second wave correction. 

Minute wave iii may only subdivide as an impulse. Within the impulse: Minuette wave (i) may be over at the last low, and the bounce of the last two days may be minuette wave (ii). Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,964.66.

A new low below 1,764.12 would add reasonable confidence to this wave count.

HOURLY CHART

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The hourly chart focusses on movement from the last low labelled minuette wave (i).

Minuette wave (ii) may be an incomplete zigzag. A preferred target may be the 0.382 Fibonacci ratio at 1,842.22. If price keeps rising through this first target, then the next target would be the 0.618 Fibonacci ratio at 1,888.97.

The narrow channel is a best fit. Assume price will keep rising while it remains within the channel. If the channel is breached to the downside, then it may be possible that minuette wave (ii) may be over.

This wave count now expects the next wave down to be a third wave at multiple degrees. An increase in momentum may be expected.

ALTERNATE DAILY CHART

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Primary wave C may be incomplete.

Intermediate wave (4) may have continued lower as a double zigzag. Intermediate wave (4) is now grossly disproportionate to intermediate wave (2); intermediate wave (2) lasted 14 sessions, whereas intermediate wave (4) so far has lasted 82 sessions. This disproportion gives the wave count the wrong look and reduces its probability further.

The wide beige channel is copied over from the weekly chart. Price has now breached the channel. This channel breach favours the main wave count.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,764.12. This is the final price point which would invalidate this wave count.

SECOND 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.

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 first 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 complete.

A best fit channel is drawn about cycle wave III in the same way as the channel as on the first wave count.

DAILY CHART

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Cycle wave III may be complete, and cycle wave IV may be underway.

Cycle wave IV may subdivide as any one of more than 23 Elliott wave corrective structures. It would most likely subdivide as a zigzag. A new bearish trend at cycle degree should begin with a five wave structure downwards at the daily chart level; this would be incomplete. No second wave correction within this first five down may move beyond the start of its first wave above 2,070.48.

Targets for cycle wave IV at this stage may be calculated from Fibonacci ratios of cycle wave III. Cycle wave IV may end at either one of the 0.382 Fibonacci ratio at 1,722.96 or the 0.618 Fibonacci ratio at 1,508.27. Cycle wave IV may not move into cycle wave I price territory below 1,303.51 (this can be seen on the weekly chart).

If the middle of primary wave A has passed, then minute wave iv may not move into minute wave i price territory above 1,849.22. If this wave count is invalidated in the short term, then labelling would be changed from the high labelled minute wave ii to match that on the first daily chart.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

At the last high were two bearish candlestick patterns with overbought RSI exhibiting double bearish divergence. It is possible there may have been a 180° trend change at the high. A new swing low below 1,671.70 would add confidence in that view.

Last week price has effected a downwards breakout below support (at about 1,800) which may now provide resistance. The breakout has support from volume at the weekly chart level, which is impressive. This chart supports the main Elliott wave counts, both first and second.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

Next support below is at 1,670 to 1,675.

Stochastics may remain extreme for reasonable periods of time when Gold trends. When ADX and RSI both reach extreme, and thereafter RSI exhibits bullish divergence, then a low may be in place.

The Bullish Engulfing pattern lacks support from volume, so it is suspicious. It may more likely suggest a small pause rather than a reversal.

So far the bounce of the last two days lacks support from volume. It may be a back test of resistance, which was prior support at 1,850.

This chart supports the main Elliott wave counts.

GDX WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

ADX gives a strong bearish signal last week.

Look out for bounces along the way down in this new trend about identified horizontal support lines on the chart.

GDX DAILY CHART

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The gap yesterday may be a breakaway gap. While the gap remains open, it will be bullish. It would be closed with a new low below 34.68.

A decline in range and volume today suggest this bounce may be limited.

Published @ 07:39 p.m. ET.

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1. Always trade with stops.

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New updates to this analysis are in bold.