A small range day fits expectations for the preferred Elliott wave count, but a lack of range suggests a short-term alternate Elliott wave count should be considered.

Summary: Both Elliott wave counts remain valid, but the bearish wave count is preferred. The bearish wave count expects the bounce may have ended at the last high. Thereafter, the short-term target is at 1,571, and the mid-term target is at 1,568. For the short term, a new low below 1,751.48 would add confidence that the bounce should be over. It will be possible though that while price remains above 1,778.64 the bounce may continue higher. A target would be at 1,817.

The bullish wave count now expects the bull market to resume to a target at 2,078. A new short-term target is calculated at 1,836.

The price point which differentiates the two wave counts at this stage is 1,677.64. A new low below this point would add strong confidence in the bearish wave count.

Grand SuperCycle analysis and last monthly charts are here.

1,839.BULLISH 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 the bearish Elliott wave count is still considered.

Cycle wave V may have begun. Within cycle wave V: Primary waves 1 and 2 may now both be over, and primary wave 3 may have just begun. If it continues any lower, then 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 waves 1 and 2 within cycle wave V may be complete.

A target is calculated for primary wave 3. Primary wave 3 should exhibit an increase in upwards momentum and have support from volume.

HOURLY CHART

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Primary wave 2 may now be complete.

Primary wave 3 may only subdivide as an impulse. Intermediate wave (1) within primary wave 3 may be incomplete and may be unfolding as an impulse.

Minor waves 1, 2, 3 and 4 within intermediate wave (1) may be complete.

Minor wave 4 may have continued sideways today as a double combination: flat – X – zigzag. This provides alternation with the relatively deep zigzag of minor wave 2. If minor wave 4 continues further as a very rare triple combination, then it may find support about the lower edge of the Elliott channel. Minor wave 4 may not move into minor wave 1 price territory below 1,751.48.

A target is calculated for minor wave 5.

Draw an Elliott channel about the start of intermediate wave (1). Draw the first trend line from the end of minor wave 1 to the end of minor wave 3, then place a parallel copy on the end of minor wave 2. The upper edge may show where minor wave 5 may find resistance.

BEARISH ELLIOTT WAVE COUNT

WEEKLY CHART

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The bigger picture for this 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 begun. Primary wave 3 has now moved beyond the end of primary wave 1 at 1,752.19, meeting this core Elliott wave rule.

Intermediate wave (2) within primary wave 3 may not move beyond the start of intermediate wave (1) above 1,832.17.

At 1,568 primary wave 3 would reach 1.618 the length of primary wave 1.

At 1,571 intermediate wave (3) would reach 1.618 the length of intermediate wave (1).

Primary wave 3 may last a few months.

HOURLY CHART

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Primary wave 3 may only subdivide as an impulse. Intermediate wave (1) within the impulse of primary wave 3 may be complete.

Intermediate wave (2) may now be a complete zigzag.

A new low below 1,751.48 at this stage would add reasonable confidence that intermediate wave (2) may be over.

Minute wave ii within intermediate wave (3) may not move beyond the start of minute wave i above 1,794.94.

The next wave down for this bearish wave count is expected to be a third wave at intermediate, primary and cycle degrees. This is a very bearish wave count. A strong increase in downwards momentum may be expected.

ALTERNATE HOURLY CHART

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If price makes a new high above 1,794.94 in the short term, then this alternate may be used.

It is possible that intermediate wave (2) may continue higher as a double zigzag. Double zigzags are common structures.

A target is calculated for the second zigzag to deepen the correction. Minute wave b within minor wave Y may not move beyond the start of minute wave a below 1,778.64.

Intermediate wave (2) may not move beyond the start of intermediate wave (1) above 1,832.17.

TECHNICAL ANALYSIS

WEEKLY CHART

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Price has reached next support about 1,675 and bounced up strongly, completing a very bullish Hammer reversal pattern. However, ADX gives a strong bearish signal this week and volume has not supported upwards movement.

DAILY CHART

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Price is bouncing with weak volume and declining ATR.

Resistance at 1,800 continues to hold, but the last two sessions look like a small consolidation below resistance within an ongoing upwards bounce. If price does close above 1,800, then the next area of resistance would be about 1,835.

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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Volume and ADX suggest more downwards movement. Look for next support about 31. If price can close below support about 31, then look for next support about 26.5.

Published @ 06:17 p.m. ET.

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New updates to this analysis are in bold.

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