A little upwards movement was expected for the short term to a likely target at 1,706. Price has moved higher than expected but remains well below the short-term invalidation point.

Summary: The first wave count is bearish for the bigger picture and classic technical analysis supports this view. This wave count expects a multi-year bear market may be in its early stages to end below 1,046.

Downwards momentum may show a further increase. A short-term target is at 1,645, but this may not be low enough. A long-term target is at 657.

The second wave count is bullish. A new upwards wave may now begin. The target is at 2,124.

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 now 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 move price below the end of Super Cycle wave (a) at 1,046.27 to avoid a truncation and a very rare running flat. The target calculated expects a common Fibonacci ratio for Super Cycle wave (c).

DAILY CHART

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Within a new bear market, cycle wave I may be an incomplete five wave impulse.

Cycle wave II within the new downwards trend may not move beyond the start of cycle wave I 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 minute wave v, minor wave 5 or intermediate 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. Draw the first trend line from the end of primary wave 1 to the last low, then place a parallel copy on the end of primary wave 2. Keep redrawing the channel as price continues lower. When primary wave 3 is complete, then this would be drawn using Elliott’s first technique and may show where primary wave 4 may find resistance.

Minuette wave (iv) may not move into minuette wave (i) price territory above 1,821.16.

HOURLY CHART

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Minuette wave (iii) may be complete.

Minuette wave (iv) may end about the 0.236 Fibonacci ratio at 1,724.04.

Redraw the Elliott channel to be drawn about minute wave iii. Draw the first trend line from the ends of minuette waves (i) to (iii), then place a parallel copy on minuette wave (ii) (this is shown in green today on the daily chart). If it is deeper and longer lasting than expected, then minuette wave (iv) may find resistance about the upper edge of this channel.

Minuette wave (iv) may not move into minuette wave (i) price territory above 1,821.16.

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 second weekly chart on prior analysis here). 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 IV has moved lower; it may again be a complete triple zigzag. The rarity of triple zigzags reduces the probability of this wave count further.

If the third zigzag of primary wave Z continues lower, then cycle wave IV may not move into cycle wave I price territory below 1,303.51.

DAILY CHART

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Cycle wave IV may be a complete triple zigzag.

Primary wave Z may again be complete.

The purpose of multiple zigzags is to deepen a correction when the first zigzag does not move price deep enough. To achieve this purpose multiple zigzags normally have a clear counter trend slope. Cycle wave IV looks normal with a clear downwards slope.

A target is recalculated for cycle wave V. If cycle wave IV continues lower, then this target must again be recalculated.

HOURLY CHART

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The hourly chart focusses on the end of intermediate wave (C).

Intermediate wave (C) may again be seen as a complete five wave impulse, which means that primary wave Z and cycle wave IV may be complete. This wave count now expects a trend change.

A new high above 1,761.70 may not be a continuation of minor wave 4, as minor wave 4 may not overlap into minor wave 1 price territory. A new high above 1,761.70 would add confidence that intermediate wave (C) should be over and add confidence in a trend change.

TECHNICAL ANALYSIS

WEEKLY CHART

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There is a series of lower swing lows and lower swing highs from the last all time high in August 2020. Downwards movement is now beginning to have a steeper slope in the last three weeks. ADX now indicates a downwards trend at the weekly time frame, and price has made another important new swing low.

Neither ADX nor RSI are extreme. There is plenty of room for a downwards trend to continue.

A downwards trend should now be the dominant view until the trend reaches extreme and then a bullish candlestick reversal pattern is seen.

This chart supports the first Elliott wave count.

DAILY CHART

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The Bullish Engulfing pattern may not be an indicator of a strong reversal because it lacks support from volume. Some consolidation or a brief bounce here may relieve extreme conditions before the downwards trend continues.

GDX WEEKLY CHART

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Price is at support, so a counter trend bounce may occur here. If support is breached, then it becomes resistance. This chart is bearish.

If support at 31 is breached, then next support is about 26.3.

Last week price has made an important new low: The last swing low within the prior upwards trend was 31.06 within the week beginning June 1, 2020 and last week a new low below this point was made at 30.64.

GDX DAILY CHART

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A counter trend bounce or consolidation may continue here. Look for resistance initially about 33.20.

Published @ 05:13 p.m. ET.

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Follow my two Golden Rules:

1. Always trade with stops.

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

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New updates to this analysis are in bold.