Another upwards session with a higher high and a higher low fits expectations for both Elliott wave counts.

Summary: A multi-week to multi-month bounce may have begun. A target for resistance is at 1,814 or 1,853.

For the short term, a B wave may now continue lower or sideways for a few more days to possibly up to three weeks. It may remain above 1,752.19.

Grand SuperCycle analysis and last monthly charts are here.

MAIN 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 may be a complete triple zigzag. Triple zigzags are not rare structures, but they are not common. The probability of this wave count is further reduced in Elliott wave terms. This is one reason why an alternate is still considered.

Cycle wave V may have begun. Within cycle wave V: Primary wave 1 may be over at the last high, and primary wave 2 may not move beyond the start of primary wave 1 below 1,677.64.

DAILY CHART

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A target is calculated for cycle wave V. If this target is wrong for this wave count, then it may be too low. As price approaches the target, if the structure is incomplete, then a higher target may be calculated.

Primary wave 1 within cycle wave V may be complete.

Primary wave 2 may be an incomplete zigzag. Within primary wave 2: Intermediate wave (A) may be complete, and intermediate wave (B) may unfold over a few weeks. Thereafter, intermediate wave (C) may continue lower and should make a new low below the end of intermediate wave (A) to avoid a truncation. When the end of intermediate wave (B) and the start of intermediate wave (C) is known, then the Fibonacci ratio between intermediate waves (A) and (C) may be used to calculate a target for intermediate wave (C).

Within intermediate wave (B): Minor wave A may now be complete, and minor wave B may now continue lower or sideways for a few sessions to about two weeks. B waves within B waves are extremely difficult to analyse; the structure of minor wave B may not be known until it is complete. Combinations and expanded flats are common structures for B waves within B waves.

Primary wave 2 may not move beyond the start of primary wave 1 below 1,677.64.

HOURLY CHART

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Intermediate wave (B) may subdivide as any one of more than 23 possible corrective structures. By a wide margin the most common Elliott wave corrective structure is a zigzag, so that shall be how intermediate wave (B) is labelled at the start. As it continues, alternate Elliott wave counts may be required to consider other Elliott wave structures.

If intermediate wave (B) subdivides as a zigzag, then within it minor wave A must subdivide as a five wave motive structure, most likely an impulse.

Minor wave A may now be a complete impulse. The Elliott channel about minor wave A is now breached by downwards movement, followed by a throwback to test resistance at the lower edge of the channel. 

Minor wave B may unfold as any one of more than 23 Elliott wave corrective structures. B waves within B waves are the most difficult waves to analyse and normally do not offer good trading opportunities.

If minor wave A is correctly labelled as a five wave impulse, then minor wave B may not move beyond its start below 1,752.19.

ALTERNATE ELLIOTT WAVE COUNT

WEEKLY CHART

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The bigger picture for this alternate Elliott wave count sees Gold as 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).

Super Cycle wave (c) may have begun with a leading expanding diagonal for cycle wave I. Leading expanding diagonals in first wave positions are uncommon, so the probability of this wave count is reduced. However, it has a good fit and must be considered.

Second wave corrections to follow leading diagonals in first wave positions are usually very deep. Cycle wave II is deep and the structure may be complete; so far it is following a common pattern. If it continues higher, then cycle wave II may not move beyond the start of cycle wave I above 2,070.78.

DAILY CHART

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A target is calculated for cycle wave III.

Primary wave 1 within cycle wave III may be complete.

Primary wave 2 may last weeks to months. Targets for resistance are the 0.382 Fibonacci ratio at 1,814.54 and the 0.618 Fibonacci ratio at 1,853.07.

Primary wave 2 may not move beyond the start of primary wave 1 above 1,915.42.

Primary wave 2 may be subdividing as a zigzag. Intermediate wave (B) within primary wave 2 may now continue lower or sideways. B waves are the most difficult to analyse as they exhibit the greatest variety in Elliott wave structure and price behaviour. Intermediate wave (B) may be a quick sharp zigzag, lasting just a few sessions, or it may equally as likely be a time consuming sideways structure such as a combination or triangle, lasting about three weeks. It is usually not possible to know which structure a B wave has sub-divided as until it is complete.

HOURLY CHART

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Primary wave 2 may unfold as any Elliott wave corrective structure except a triangle. The most common corrective structure by a wide margin is a zigzag. Primary wave 2 will be labelled as a possible zigzag, but alternate wave counts for alternate structures may be required in coming weeks.

If primary wave 2 subdivides as a zigzag, then intermediate wave (A) must subdivide as a five wave motive structure, most likely an impulse.

Intermediate wave (A) may now be a complete impulse. The Elliott channel about intermediate wave (A) is breached today by downwards movement, which is followed by a throwback to test resistance. This is an indication that intermediate wave (A) may be over and intermediate wave (B) may now be underway.

Intermediate wave (B) may subdivide as any one of more than 23 possible Elliott wave corrective structures. It may be a quick sharp zigzag, lasting just a few sessions, or it may be a time consuming sideways consolidation, lasting weeks and sub-dividing as a combination or triangle. It is not usually possible to know which structure a B wave has sub-divided as until it is complete.

If intermediate wave (A) is correctly labelled as a five wave structure, then intermediate wave (B) may not move beyond its start below 1,752.19.

WEEKLY CHART

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A little support for upwards movement from volume last week suggests more upwards movement this week.

DAILY CHART

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For the last completed session, a bearish long upper wick and volume spike suggest an upwards swing may have ended here. A downwards or sideways reaction may follow.

GDX WEEKLY CHART

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A long legged doji last week may be a pause within an ongoing downwards trend, or it may be part of a bullish reversal. The next weekly candlestick will determine if a reversal pattern is forming here.

GDX DAILY CHART

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After the downwards trend reached extreme and RSI reached oversold then exhibited bullish divergence, a bounce or consolidation may now continue to relieve extreme conditions. Look for price to continue higher now towards next resistance; if it reaches resistance and Stochastics reaches overbought, then an upwards swing may end there or shortly after.

Published @ 06:11 p.m. ET.

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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.

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New updates to this analysis are in bold.

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