Downwards movement today fits expectations for the first Elliott wave count.

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 have begun. 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 minuette wave (v), 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.

The channel about minute wave iii is drawn using Elliott’s second technique. The first trend line is drawn from the ends of minuette waves (ii) to (iv), then a copy is pulled lower to the end of minuette wave (iii). Minuette wave (v) may end mid way within the channel or about its lower edge. The upper edge of the channel is showing about where price is finding 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 (v) downwards may possibly exhibit an increase in momentum to end minute wave iii.

Minuette wave (v) would most likely subdivide as an impulse. Within minuette wave (v): Subminuette wave i may be incomplete, and subminuette wave ii may not move beyond the start of subminuette wave i above 1,754.45.

Micro waves 1 and 2 within subminuette wave i may be complete. Sub-micro wave (1) and (2) within micro wave 3 may now be complete. Minuscule waves 1, 2 and 3 within sub-micro wave (3) may be complete. Minuscule wave 4 may not move into minuscule wave 1 price territory above 1,724.61.

A target is calculated for minuette wave (v) to complete minute wave iii. This target expects the target on the daily chart for minor wave 3 to end is wrong.

When subminuette wave i may be complete, then subminuette wave ii may not move beyond the start of subminuette wave i above 1,754.45.

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.

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.

A best fit channel is drawn about cycle wave IV. If this channel is breached by upwards movement with at least one full daily candlestick above and not touching the upper edge of the channel, then that may provide confidence in this second Elliott wave count.

HOURLY CHART

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The hourly chart focusses on the beginning of cycle wave V.

Minor waves 1 and 2 within the new trend may be complete.

Minute wave i within minor wave 3 is now labelled as complete at the last high. Minute wave ii may be continuing lower as a single zigzag. Within minute wave ii: Minuette waves (a) and (b) may be complete, and minuette wave (c) may be continuing lower as an impulse. Minuette wave (c) would be likely to move at least slightly below the end of minuette wave (a) at 1,721.34 to avoid a truncation. Minuette wave (c) has now moved below the end of minuette wave (a), but the structure of minuette wave (c) is incomplete. It requires one small final low.

Minute wave ii may not move beyond the start of minute wave i below 1,699.57.

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. 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.

Within the prior upwards trend, the last major swing low is the week beginning June 1, 2020, at 1,671.70. So far price has not made a new low below this point. If price does make a new low below 1,671.70, then the view of a new downwards trend would be strengthened.

The last three weekly candlesticks lack range and support from volume. So far this looks like a small counter trend bounce.

DAILY CHART

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A bounce has now relieved some extreme conditions; RSI is no longer oversold, although ADX is still above both DX lines.

ADX may reach very extreme (over 45 and above both directional lines) before a trend in this market may end. It is currently declining, indicating no clear trend. But if it again increases, then it would again indicate an extreme downwards trend.

The last session sees price fall of its own weight. This is a shorthand way of saying price may be falling due to lack of activity from buyers rather than activity from sellers. This is not bullish as price can fall of its own weight for a considerable distance.

On Balance Volume is now tightly constrained within converging trend lines. It should give a signal tomorrow.

GDX WEEKLY CHART

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For GDX the last major swing low within the prior upwards trend is the low at 31.06 in the week beginning June 1, 2020. GDX has made a slight new low below this point. This is significant and supports the view that GDX may have had a trend change.

For confidence in a Morning Star reversal pattern the third candlestick should have support from volume. This one does not, so confidence may not be had in this pattern.

The last weekly candlestick has weak volume and a bullish long lower wick. The short-term bounce may not be over. However, it does look more likely to be complete at the daily chart level.

GDX DAILY CHART

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Two Shooting Star bearish candlestick reversal patterns add weight to the possibility that the last bounce may be over and a downwards trend may resume.

A gap lower may provide resistance now at 33.49.

Again, weak volume for an upwards session suggests this may be a counter trend movement that may end sooner rather than later. Next resistance is at 33.20.

Published @ 05:29 p.m. ET.

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New updates to this analysis are in bold.