Downwards movement was expected from both Elliott wave counts.

Summary: The main wave count now has a target for a downwards wave at 1,732 and an invalidation point at 1,677.64. The alternate wave count now has a target for a primary degree third wave down at 1,569 and a confidence point at 1,677.64. Use the upper edge of the base channel on the hourly chart for a guide to where bounces along the way down may find resistance.

If price makes a new high above 1,823.69 early next week, then expect overall upwards movement towards a target at 1,853.07.

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.

Double flats are fairly rare structures. The probability of this wave count is further reduced.

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. Intermediate waves (A) and (B) within primary wave 2 may now both be complete.

It is possible that intermediate wave (B) may be complete as a single zigzag, as labelled, but it is also possible that it may continue higher as a double zigzag.

A target is calculated for intermediate wave (C). Intermediate wave (C) should at least make a new low below the end of intermediate wave (A) to avoid a truncation.

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

HOURLY CHART

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Minor waves 1 and 2 within intermediate wave (C) may be over. Minor wave 3 may have begun; it may only subdivide as an impulse.

Minute wave ii within minor wave 3 may not move beyond the start of minute wave i above 1,823.69.

Draw a base channel about minor waves 1 and 2. Draw the first trend line from the start of minor wave 1 to the end of minor wave 2, then place a parallel copy on the end of minor wave 1. Bounces along the way down within minor wave 3 may find resistance about the upper edge of this channel. Minor wave 3 should have the power to break below the lower edge of the channel.

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 waves 1 and 2 within cycle wave III may be complete.

Primary wave 3 may have begun. A target is calculated for primary wave 3. Within primary wave 3, no second wave correction may move beyond its start above 1,832.87.

A new low below 1,677.64 would invalidate the main Elliott wave count and add confidence in this alternate Elliott wave count.

HOURLY CHART

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Minor waves 1 and 2 within primary wave 3 may now be over. Minute wave ii within minor wave 3 may not move beyond the start of minute wave i above 1,823.69.

Draw a base channel about minor waves 1 and 2. Draw the first trend line from the start of minor wave 1 to the end of minor wave 2, then place a parallel copy on the end of minor wave 1. Bounces along the way down within minor wave 3 may find resistance about the upper edge of this channel. Minor wave 3 should have the power to break below the lower edge of the channel.

SECOND ALTERNATE DAILY CHART

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It is also possible that primary wave 2 may not be over and may continue higher as a double zigzag, to end closer to the 0.618 Fibonacci ratio of primary wave 1 at 1,853.07.

A new high above 1,823.69 would see the short-term Elliott wave count at lower time frames invalidated, so this alternate wave count would then be considered.

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

TECHNICAL ANALYSIS

WEEKLY CHART

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Volume is bearish for the short term. The last few upwards weeks came with weak range and volume.  But although this downwards week now has some push from volume, the range is small.

DAILY CHART

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Volume is bearish, but price and On Balance Volume are at support. ADX has come down from extreme and may be ready soon to indicate a new trend.

Price needs to break below support about 1,800 before any confidence in the main Elliott wave counts may be had. A lack of range for downwards movement suggests the alternate Elliott wave count should be considered.

GDX WEEKLY CHART

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This week downwards movement has run out of steam with a small range and weaker volume. Stochastics is oversold, but price is not at support; some bounce within a downwards swing may unfold next week.

GDX DAILY CHART

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

Price is consolidating with resistance about 35 and support about 33.0. A breakout is required before confidence in the next direction may be had. As price now sits near support, volume and range have declined. Downwards movement may end here or be interrupted with another bounce.

Published @ 09:31 p.m. ET.

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New updates to this analysis are in bold.

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