GOLD: Elliott Wave and Technical Analysis | Charts – August 6, 2021
The second (preferred) Elliott wave count has expected an increase in downwards momentum and Friday’s strong downwards session fits this expectation perfectly.
Targets remain the same. Invalidation points may be moved lower.
Summary: Both the main and alternate Elliott wave counts expect downwards movement to a target at 1,731 or 1,568.
The second Elliott wave count is still preferred. Now that price is moving strongly lower the wave count has further support from classic analysis and price action.
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 wave (B) within primary wave 2 may be a complete double combination.
Intermediate wave (C) should make at least a slight new low below the end of intermediate wave (A) at 1,752.19 to avoid a truncation. At 1,731 intermediate wave (C) would reach 0.618 the length of intermediate wave (A).
HOURLY CHART
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Intermediate wave (C) may only subdivide as a five wave motive structure.
Minor waves 1 and 2 within intermediate wave (C) may be complete.
Minor wave 3 may have passed through its middle portion today. Minor wave 3 may only subdivide as an impulse.
Within minor wave 3: Minute waves i and ii may be complete, and minute wave iii may be continuing lower and may only subdivide as an impulse. Minuette wave (iv) within the impulse of minute wave iii may not move into minuette wave (i) price territory above 1,799.01.
Draw an acceleration channel about intermediate wave (C). Draw the first trend line from the end of minor wave 1 (seen on the daily chart, the low on August 2nd) to the last low, then place a parallel copy on the end of minor wave 2. Keep redrawing the channel as price keeps moving lower. When minor wave 3 may be over, then the upper edge of the channel may provide resistance for minor wave 4.
Minor wave 4 may not move into minor wave 1 price territory above 1,806.56. Minor wave 4 may be relatively brief and shallow; it may be over within a day.
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 2 may be a complete double combination. Primary wave 3 downwards may have just begun. Primary wave 3 must move beyond the end of primary wave 1, so it must move below 1,752.19.
No second wave correction within primary wave 3 may move beyond its start above 1,830.87.
At 1,568 primary wave 3 would reach 1.618 the length of primary wave 1.
Gold often exhibits swift strong fifth waves, particularly fifth waves to end third wave impulses one degree higher. Any one or more of minute wave v to end minor wave 3, minor wave 5 to end intermediate wave (3), or intermediate wave (5) to end primary wave 3, may exhibit this tendency and may end with selling climaxes. Primary wave 3 may last a few months.
HOURLY CHART
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The degree of labelling within primary wave 3 is today moved up one degree.
Primary wave 3 may only subdivide as an impulse. Intermediate waves (1) and (2) within the impulse of primary wave 3 may be complete.
Intermediate wave (3) may only subdivide as an impulse. Minor waves 1 and 2 within the impulse of intermediate wave (3) may be complete.
Minor wave 3 may only subdivide as an impulse. Minute waves i through to iv within the impulse of minor wave 3 may be complete. If minute wave iv continues, then it may not move into minute wave i price territory above 1,799.01.
When it arrives, intermediate wave (4) may not move into intermediate wave (1) price territory above 1,806.56.
TECHNICAL ANALYSIS
WEEKLY CHART
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Price this week has convincingly broken below support at 1,800. Stochastics is not yet oversold, so there is room for price to fall further here. Next short-term support is at 1,750 and below that 1,675.
DAILY CHART
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This chart strongly supports the Elliott wave analysis. Moving averages, volume, On Balance Volume, and ADX are all bearish. There is plenty of room for a downwards trend to continue before conditions with ADX and RSI reach extreme. When this market has a strong downwards trend, RSI can reach extreme and remain there for a few days while price can move a considerable distance.
GDX WEEKLY CHART
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There is still no clear trend at this time frame. Price is range bound.
GDX DAILY CHART
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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.
ADX today indicates a potential trend change to downwards with the -DX line crossing above the +DX line. If the black ADX line turns up, then a downwards trend would be indicated. On Balance Volume, ATR and volume suggest a downwards trend may be developing.
Published @ 06:10 p.m. ET.
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New updates to this analysis are in bold.
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