More sideways movement has unfolded exactly as expected.
The breakout is still expected in another one or four days.
Summary: A small consolidation continues and may continue for another one or four more days. When the consolidation is complete, price should break out downwards towards the new short term target at 1,185. There is no support for upwards movement, so it looks like there is a new downwards trend.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
The last published monthly chart may be seen here.
At this stage, weekly charts will still be published daily to minimise confusion over why the daily charts are so different.
WEEKLY ELLIOTT WAVE COUNT
Click chart to enlarge.
This first wave count sees the big wave down from the all time high for Gold in September 2011 as a completed five wave structure.
If downwards movement is a five wave structure, it may only be cycle wave a within a larger zigzag of super cycle wave (a). It is more likely that Grand Super Cycle wave IV will be a zigzag, flat or triangle, which means super cycle wave (a) is most likely to be a zigzag. The least likely structure for Grand Super Cycle wave IV would be a single zigzag, so the least likely structure for super cycle wave (a) would be an impulse. This allows for alternation between the single zigzag of Grand Super Cycle wave II and a flat, combination or triangle for Grand Super Cycle wave IV.
Within cycle wave a, there is good alternation between the deep combination of primary wave 2 and the shallow zigzag of primary wave 4. Primary wave 2 is much longer in duration, but that is okay because combinations are more time consuming. Zigzags are the quickest of all corrective structures.
The – – – maroon channel is drawn about cycle wave a using Elliott’s technique. The whole structure is contained within it, with the exception of an overshoot for the middle of the third wave. This is a very common tendency; the middle of a third wave is often the strongest portion of an impulse and it ends with a swift strong fifth wave which commonly overshoots channels. This part of the wave count has a typical look.
If a five down is complete, then a three up should follow.
The problem now becomes to identify which one of more than 23 possible corrective structures cycle wave b may take. It may be a quick relatively shallow zigzag as labelled, or it may be about only half way through. This wave count sees it as possibly complete. If price breaks below 1,200.07, then this first wave count would be considered confirmed.
DAILY ELLIOTT WAVE COUNT
Click chart to enlarge.
If there has been a trend change at a large degree at the last high, then what looks like a rather obvious triangle must be ignored. It is possible that a series of three overlapping first and second wave corrections has unfolded, but this does look less likely than a triangle.
The triangle may not be labelled as a second wave because second waves do not take the form of triangles.
This wave count is reverted to see minor wave 3 incomplete and minute wave iv within it now unfolding. There is no Fibonacci ratio between minute waves i and iii.
Minute wave iv may not move into minute wave i price territory above 1,306.70.
At 1,185 minor wave 3 would reach 2.618 the length of minor wave 1.
Minute wave ii was a deep 0.81 zigzag lasting four days. Minute wave iv is least likely to be a zigzag to exhibit alternation and most likely to be a sideways flat, combination or triangle. It may last a bit longer than minute wave ii as sideways structures tend to be longer lasting than zigzags. It may last a Fibonacci five or eight days. It may continue now for either one or four more days.
HOURLY ELLIOTT WAVE COUNT
Click chart to enlarge.
There are more than 23 possible structures that minute wave iv may unfold as. None of the possibilities may yet be eliminated, but a single or multiple zigzag is least likely.
Minute wave iv is most likely to be a flat, combination or triangle. As it continues the labelling within it may change again as the structure becomes clearer.
With price moving sideways in a narrow range, a triangle still looks possible. If price does not make a new high above 1,264.72 or a new low below 1,247.91, then a triangle will remain valid. Sideways movement for another one or four days would be expected.
If the triangle is invalidated, then minute wave iv may be unfolding as a double combination.
If the triangle is invalidated and price moves below 1,245.06, then a flat correction may be unfolding.
At this stage, it looks like this correction is going to be very shallow and a bounce back up to resistance about 1,305 now looks less likely.
It is still not possible to see minute wave iv as a complete three wave structure today.
ALTERNATE II WEEKLY ELLIOTT WAVE COUNT
Click chart to enlarge.
This second wave count sees the big wave down from the all time high in September 2011 as a completed double zigzag. This is classified as a “three”.
If cycle wave a is subdividing as a double zigzag, then that indicates a larger flat correction for super cycle wave (b). Super cycle wave (b) may be unfolding as an expanded flat in order to reach the depth required for it within Grand Super Cycle wave IV discussed with the monthly chart.
The first zigzag in the double is labelled primary wave W. The double is joined by a three in the opposite direction labelled primary wave X, which subdivides as a zigzag, the most common structure for X waves. X waves within double zigzags are normally relatively brief and shallow and so far this one is 12 weeks to the 30 weeks of primary wave W. So far it is relatively brief and corrected only 0.328 of primary wave W, so it is relatively shallow. So far this has a typical look.
The second zigzag in the double for primary wave Y may reasonably be expected to be about even in length and duration with primary wave W.
ALTERNATE II DAILY ELLIOTT WAVE COUNT
Click chart to enlarge.
There is no rule stating a limit for X waves within double zigzags or double combinations. To achieve the purpose of a double zigzag, which is to deepen a correction, their X waves should be relatively brief and shallow. It would be highly unusual and defeat the purpose if primary wave X moved beyond the start of intermediate wave (C) of primary wave W below 1,200.07. This wave count should be discarded below that point.
Primary wave X is seen as a zigzag. Within primary wave X, intermediate wave (B) fits neatly as a triangle. This is supported by MACD hovering about zero as it unfolded. Any wave count which sees a triangle in this position should have a higher probability than a wave count which does not.
The zigzag downwards for primary wave X may again be complete, at all time frames. A target for primary wave Y upwards would be about 1,569 where primary wave Y would be about even in length with primary wave W.
ALTERNATE II HOURLY ELLIOTT WAVE COUNT
Click chart to enlarge.
The more price moves sideways the lower the probability of this wave count. If there has been a trend change at primary degree three days ago, then price should be moving strongly higher, with support from volume. This is not happening, yet.
Minute wave i upwards does subdivide very well as a five wave structure. Minute wave ii may be over. Or it may be continuing further sideways and may not move beyond the start of minute wave i below 1,242.87.
If minute wave ii is over, then minuette wave (i) upwards must subdivide as a five wave structure. It may be unfolding as a leading expanding diagonal. These are not very common structures, so this idea has a low probability.
ALTERNATE III WEEKLY ELLIOTT WAVE COUNT
Click chart to enlarge.
This alternate wave count is identical to main wave count published above, with the exception of the degree of labelling within cycle wave b.
If the degree of labelling within cycle wave b is moved down one degree, then the zigzag may have been only the first in a double. It may also be a zigzag for wave A of a flat correction or triangle.
If it is not over and if it is continuing further, then a double zigzag looks most likely for cycle wave b at this stage because it would be able to reach higher, so that cycle wave b is closer to the 0.618 Fibonacci ratio of cycle wave a, which is at 1,587. It also looks more likely because primary wave X looks likely to end soon, so to be shallow. Primary wave X looks likely to end soon because it looks like a triangle recently completed for wave B within it, which would be a zigzag.
A daily chart for this wave count would look the same as the daily chart for the alternate II wave count.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A strong downwards week closes with a strong increase in volume. The fall in price is well supported by volume. Price has broken out of a consolidation to the downside.
A back test to support about 1,305 would be typical behaviour for price after a breakout.
On Balance Volume may be beginning to break below the yellow support line at the end of last week. However, there is a little leeway in exactly how this line is drawn and the break needs to be clearer before it may be interpreted as a bearish signal. If OBV turns up this week, then the line should be slightly redrawn.
There is some mid term divergence at the end of last week between price and RSI: RSI has made a lower low, but price has made a higher low (yellow lines). This divergence is bullish and indicates weakness in price. This divergence supports the main Elliott wave count and the alternate III count.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A small upwards day completes a green doji with very slightly higher volume. Volume is still low though. There is a little support for the rise in price, but overall volume for the last four days is very low. This suggests a small consolidation may be forming and supports the main Elliott wave count.
The yellow trend line on On Balance Volume may provide resistance and halt the rise in price. Mid term divergence between price and OBV is noted, shown with cyan trend lines. Price has made a new low below the low of 24th of June, but OBV has not made a corresponding new low. This divergence is bullish and indicates weakness in price.
RSI is returning from oversold. Some more upwards movement from price may be expected to bring RSI back into normal territory.
Price broke out of a long consolidation downwards. It would be typical behaviour to now see a counter trend bounce end about prior support, which should now provide resistance about 1,305. However, so far price has failed to move much higher. There may not be enough buying power from bulls to push price back up to test resistance.
ADX is above 15 and increasing. The -DX line is above the +DX line. Bollinger Bands are widening, so volatility has returned to the market. A downwards trend is indicated.
As price moves sideways for the last four days, ATR is now declining. This may indicate a small correction within the new downwards trend.
With price closing below the lower edge of Bollinger Bands for four days in a row, it would be typical behaviour to now see price move up towards the mid line of Bollinger Bands, to revert to the mean.
This analysis is published @ 08:11 p.m. EST.
IMO: Don’t see Gold price get past 1258-60 spot on any rally attempt (upside risk 1264-65 spot), whilst it goes bottom fishing. Silver is looking to bottom too.
Are we in a seasonal end of year bottoming process for gold and miners.
Last year gold dropped from October 15th to December 3rd and GDX from October 12th to almost a double bottom mid November and then bottomed January 19th.
Gold year end bottom December 30th, 2013 then November 3rd, 2014 and December 3rd, 2015.
GDX bottomed December 23rd, 2013 then November 3rd, 2014 then September 7, 2015 and January 19, 2016.
Perhaps we may look for another gold and miners bottom near the end of the year, which tends to happen.
The move UP for minute iv MAY have just ended at 10:06 am at 1,258.38.
“is it is possible that the consolidation may now be over.”
Hourly alternate II invalidation at 1,242.87.
The next target maybe 1,185 for minor 3.
Richard. That might be a possibility. Only thing is that, as Lara pointed out, it’s too quick. I am waiting to see if it continues as a 3-wave zigzag. If 5 waves, then the triangle is kaput, and price would go higher. Of course, if price drops below 1247.67 then it would be minute 5 in progress.
The alternate hourly updated. The slight new low today means minute ii moved lower.
It will fit as a double zigzag, but it doesn’t have the right look. The second zigzag in a double exists to deepen the correction, this one does technically do that but by only 0.24.
This is my first attempt at minute wave iv today.
It’s possible… just…. that it could be a complete regular barrier triangle. The rule for wave D of a barrier triangle is it should end about the same level as B so that the B-D trend line is “essentially flat”. What this means in practice is B can end very slightly beyond the end of D, as long as that trend line looks flat.
And this one does.
E falls a little short of the A-C trend line. Which looks normal. The only bit that doesn’t look normal there is the duration of E, it’s too quick.
The other bit I haven’t figured out yet is subminuette b within minuette (d).
Anyway, the message here is it is possible that the consolidation may now be over. Up until now I haven’t been able to see a complete structure.
It’s strange that no one has picked this up yet.
The drop below 1247.91 prior to market opening necessitates a tweak in the wave counts.
Main Count:
Minute 4 triangle is invalidated. Instead, I reckon Minute 4 evolves into a double combination 1242.87 – 1264.72 – 1247.67 – ? If c=a, the target is 1269.52. The c wave could rise to 1.272, 1.382 or even 1.618 retrace.
Alternate II:
Minute 3 is invalidated. Instead, it appears that Minute 2 continued on, completing at 1247.67. (Invalidation point 1242.87). I’m keeping my fingers crossed that 1280+ followed by 1300 is in play.
A barrier triangle is still possible, but I agree, a combination now looks more likely.
Good morning, just trying to work it out now 🙂
It can’t be a flat, because B has not retraced 0.9 of A.
I’m trying to see how a combination would fit, and I cannot so far make it work.
Alan,
Another technical analyst I follow sees Gold at $1,310 or higher before Oct. 21, 2016. BTW – he was the lone guy predicting the drop while majority others were unsure or looking for higher prices in GOLD.
Hi R_Gold.
That’s good to know, that there are many out there who see a move higher. But, there is a chance that everyone else is wrong and Lara is right.
Lots of additional charts are shown here. I guess this tape still causes no headaches for long term investor….lol
It’s a nightmare actually. B waves are the worst, most difficult to analyse. And we’re in a B wave of a very large degree. And may be within it for another year or more 🙁
The Mother of all B waves, and for a year, oh no.
Why Mama Mia why, please make it go away.
IKR.
Within it there will be trends that will last for months. The problem is figuring the next direction for a trend is hard because of the multiple structural possibilities.
The other problem that B waves exhibit is TA tools just don’t work as well within them. If there’s something “off”, something that makes you wonder what on earth is happening, it’s probably a B wave.
They really suck 🙁
Avi Gilburt’s seekingalpha.com October 9th article said as long as GDX is above $19.80 then Buy.
Also that if GDX goes above $26.25 then the bottom already happened.
Thank you very much Dreamer for posting those charts. Because they’ve offered them free I’m happy to leave them up here, despite copyright. They’ve already put them in the public domain.
I just quickly scanned my comments and realised they’re all rather negative. That’s not nice.
The wave counts are valid (except for the bit that violates an EW rule). And are a helpful addition in thinking about what might be happening with Gold right now.
Lara, over the last several years, I have learned a lot about EW from you and very much trust your guidance and wave counts. That said, EW is complex and often offers many apparent “correct” or “possible” counts until time proves one to be more correct than the others.
I only share these “public domain” EWI postings in the spirit that they may allow you and members to look at the current counts under consideration in a new light. I realize that just because they come from EWI that they are not always correct and if on occasion you judge them to be valid possibilities, you may adopt them. I very much respect your strict adherence to the rules of EW.
I only post my own charts or those that are obtained from the public domain of the internet.
I think it also sends a message of confidence to members that you allow these postings and are often able to point out the deficiencies in them, if any.
So anyway, thanks again for your feedback and openness to all ideas.
Thank you Dreamer.
Elliott wave is so darn difficult, if I’m not open to new ideas that would be pretty silly of me 🙂
Lara. I was toying with this for quite a while since you posted that Cycle B had ended on July 6 at 1374.91. (That is one reason why I had been silent for quite a while; I wanted to take some time to reason this out). I thought that Cycle B could have ended much higher, something like a WXY combination. This is not to detract from your excellent work. It’s just an alternative option. My thoughts were:
(a) Second waves have a good chance of developing into a combination rather than a simple zigzag or flat. I have been caught too often with this possibility, and hence it had been ingrained into my mind.
(b) Looking at the time taken, Cycle A (1923.70 to 1046.38) took 4 years. The rise from 1046.38 to 1374.91 took merely 7 months. It seems rather short. B waves are the “sucker punch” in trading. They exist to confuse and to dupe traders, and are usually quite long drawn.
(c) At 1374.91, “Cycle B” is a 0.382 retracement. Not that it is short, in fact it appears quite often. However, I just like the 0.618 correction since it gives the wave picture a nicer look.
In short, I would personally at least put the WXY correction in the picture. Quite a few analysts use this, like Tom. Avi Gilburt, whom Richard frequently posts, also alludes to this. Like them, my personal conviction is that Cycle B would most likely reach the 1500s at 0.618 retrace. The drop to 1185 thereabouts could be viewed as Primary X with the rise to 1500s yet to play out as Primary Y. Let’s see how this works out in the near future. In the meantime, I’m enjoying the ride down to sub-1200. DUST had been quite potent as of late.
I think I have covered these possibilities in my alternate weekly charts?
Weekly alternate II sees cycle a continuing as a double zigzag.
Weekly alternate III sees cycle b continuing as a double zigzag.
The key is firstly in what structure that fall from the ATH at 1,920 to 1,046 is. Is it a three? Or is it a five?
If it’s a three then the following wave up for the B wave (whether it be cycle or super cycle, I’m considering both) would most likely be very deep. And at this stage a W-X-Y double zigzag looks most likely.
So sorry Alan, I’m not really sure why you’re asking if I’m considering these options? Its there in the weekly charts?
Yes, Lara. They are in your report.
I just wanted to highlight them to members, in case some missed them.
Aaaaahhh I see
Cheers!
Yep! I got a triple in JDST call options the last month!
So Lara, still looking at the possibility that the move up since January is a complete 5 wave structure and not a 3 (W-X-Y), I reworked the chart I shared a few days ago.
Just looking at the move up to the high, is this a possible valid count and if so, is it something that should be considered? Your thoughts are appreciated.
Yeah, it’s entirely possible.
But because intermediate (4) is so much longer in duration than intermediate (2) it still looks like trying to force a five into a three. But I agree, it’s possible.
I will keep it charted and I’ll follow it, but I’d only use this idea if it shows itself to be true.
If we’re about to see a triangle unfold sideways then I’d rather see it as an X wave within a double zigzag. That would have a better look in terms of proportions.
This is the daily chart. As you can see, he thinks the move down is a 3 (W-X-Y). So the current Y wave would also be a 3. He sees a possible B wave of Y starting now with a final C wave of Y targeting the 1200 range, which is where the 4th wave ended for the move up from January.
Lara, once again, thanks for allowing these other ideas to be posted. I look forward to your thoughts.
I think it’s a bit slack of them to leave the subdivisions within (A) completely unlabelled. Because it makes a really big difference. One must assume here that (A) is seen as a zigzag. Okay, that would fit neatly.
So that means (B) must retrace a minimum 0.9 of (A). Looks like they’re expecting a flat correction is unfolding, and price is now within (B) downwards.
This is another weekly chart, moved over to show the current move up since January.
Although the count is not shown, it’s important to note that he thinks the move up that he has labeled (A) is a complete 5 wave structure.
This has important implications and could mean that this move down could go a little deeper as shown, then start the next big leg up.
Crikey. They’re still publishing wave counts that violate Elliott wave rules in Frost and Prechter?
That ending contracting diagonal of (5) has wave 3 which is longer than wave 1. That violates the rules regarding wave lengths for contracting diagonals.
What’s the point?
If we re-write Elliott wave rules when we want to, then we’re engaging in a pointless exercise.
If Prechter thinks that rule needs to be rewritten then I do so wish he’d update his book.
This first weekly chart from Tom, shows the move down from the 2011 top as a 5. It’s interesting to note that this wave count is different from the one I shared a week ago from another EWI analyst, Jeffrey Kennedy.
This count appears to violate a core EW rule for ending diagonals as Lara has stated many times in her teaching.
I guess that the different EW analysts don’t compare their wave counts?
This is his monthly view. As you can see, he thinks that gold has a little more down to go, then another big leg up before the massive final leg down. The target on his monthly chart is 681, and as you saw, his target on the quarterly chart was 610. He calls this a “cluster”.
This is pretty much what I have at the monthly chart level.
We’re in a B wave, at a large degree.
Now the problem I’ve learned (the hardest way) with B waves is they’re the worst. They can be quick and shallow, or they can be very time consuming. They exhibit the greatest variety in structure and duration. They have so many different looks.
So it’s really important at this juncture IMO to consider multiple possibilities, and pay attention to the detail of how each wave is subdividing. Because that is going to guide what the larger structure may be. And still, one will get bits wrong. As I have, and probably will again.
If the market is going to throw a curve ball, it’s often a B wave.
This is his quarterly chart. He thinks that ultimately the gold correction could get as low as 610, but it will take many years to get there.
So today, EWI Senior Metals Analyst, Tom Denham, presented a 30 minute webinar on the site of GannGlobal for their free members. I’ll provide a link to the video, but you will likely need to be a free registered member to view it. The first 30 minutes cover gold, then he covers silver and copper for those interested.
I’m also going to post several screenshots as I know Lara prefers them to a long video.
http://www.gannglobal.com/webinar/2016/November/16-10-EWI-WebinarVideo.php?inf_contact_key=fc0bdad83882f08607d724b09e55e47db702518bd4b4c999c78f32a740cff99f
I do so very much! Thank you Dreamer. You’ve again saved me masses of time.