An outside day closes with a red candlestick, which slightly favours the main Elliott wave count.
Both Elliott wave counts remain viable while price remains within the consolidation / invalidation points.
Summary: A new low below 1,247.67 would confirm the main wave count. The target is at 1,227. If this target is wrong, it may not be low enough. It is possible that a swift strong extended fifth wave may unfold lower. If price moves above 1,306.70, the alternate bullish wave count would be confirmed, so look out for a swift strong third wave to end upwards. Classic technical analysis still supports a bearish outlook.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
The last published monthly chart may be seen here.
To fit daily charts into the bigger picture see last analysis of weekly charts here.
DAILY ELLIOTT WAVE COUNT
Click chart to enlarge.
The movement up from the low of 1,046 on the 3rd of December, 2015, subdivides 5-3-5. Current downwards movement is too deep to reasonably be considered a second wave correction (that idea has been discarded based upon an exceptionally low probability), so the movement up from 1,046 is seen as a complete zigzag. This may be either the entirety of a correction, or it may be the first zigzag in a double zigzag. This main wave count looks at it as an entire correction.
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.
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 now be a complete double combination lasting nine days and not exhibiting a Fibonacci duration.
The pink channel is drawn using Elliott’s second technique. Draw the first trend line from the ends of minute waves ii to iv, then place a parallel copy on the end of minute wave iii. Minute wave v may find some support about the lower edge.
At 1,228 minute wave v would reach equality in length with minute wave i.
HOURLY ELLIOTT WAVE COUNT
Click chart to enlarge.
So far the high labelled minute wave iv remains intact. If this wave count is correct, then price should begin to move strongly lower as a third wave within minute wave v unfolds over the next day or so.
If the target at 1,228 is wrong, it may not be low enough. It is possible that minute wave v could be a swift strong extension, typical of commodities. If price keeps falling through the first target, then a next reasonable target would be at 1,200 where minute wave v would reach 1.618 the length of minute wave i. With this target also being an important round number, it is reasonable to expect price to find strong support there. If minute wave v is extended, it may end with a selling climax: a strong downwards day with a volume spike.
The first wave down within minute wave v is labelled minuette wave (i). This will fit as a five wave impulse on the five minute chart.
The following correction is a deep 0.85 zigzag labelled minuette wave (ii). This has overshot the pink channel and found resistance perfectly at the lower edge of the violet channel.
The upper edge of the pink channel should provide resistance now that price is back within it.
If price can make a new low in the next couple of days below 1,247.67, this wave count may be considered confirmed.
Minute wave iv may not move into minute wave i price territory above 1,306.70.
ALTERNATE II DAILY ELLIOTT WAVE COUNT
Click chart to enlarge.
What if the zigzag upwards from the low of 1,046 on the 3rd of December, 2015, is only the first zigzag in a double?
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 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.
The degree of labelling within primary wave Y is moved up one degree today. So far, within the five up for intermediate wave (A), minor waves 1 and 2 may be complete. Within minor wave 3, minute waves i and now ii may also be complete.
ALTERNATE II HOURLY ELLIOTT WAVE COUNT
Click chart to enlarge.
Minor wave 3 must move far enough above the end of minor wave 1 at 1,264.72 to allow room for a subsequent fourth wave correction to unfold and remain above first wave price territory. It still has not done that. The conclusion for this alternate wave count must still be that minor wave 3 is incomplete.
So far, within minor wave 1, a five wave impulse upwards is complete and this is labelled minute wave i.
Now a following three wave structure downwards looks to be also complete, falling just short of the 0.618 Fibonacci ratio at 1,259. This may be a zigzag for minute wave ii.
If minute wave ii is not over and continues further as a double zigzag, combination or flat, then it may not move beyond the start of minute wave i below 1,247.67. This alternate would be fully discarded below that point.
At 1,305 minor wave 3 would reach 1.618 the length of minor wave 1.
At 1,569 primary wave Y would reach equality in length with primary wave W.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
An upwards week shows a further decline in volume. This supports the main bearish Elliott wave count.
Two small range weeks in a row have moved price sideways and slightly higher. This looks like a small consolidation at this stage and not necessarily a new upwards trend.
On Balance Volume remains constrained within support and resistance lines.
The divergence noted with yellow lines between price and RSI at the last two swing lows is bullish. It indicates weakness in price. This supports the alternate Elliott wave count.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A downwards day with an increase in volume indicates there is support for downwards movement. Overall, volume is still light. It is now two downwards days during this consolidation that have strongest volume suggesting a downwards breakout is more likely than upwards. This technique does not always work, as members have seen recently, but it still does work more often than it does not, so it is still considered.
It looks increasingly likely that a flag pattern is unfolding. These are often characterised by light and declining volume. Until today, volume was declining and today’s increase is still relatively light.
Flags and pennants are the most reliable of continuation patterns. Using the measure rule, if price breaks out of the pattern about 1,250, then a target of 1,145 is obtained. The message here is that the Elliott wave targets may be too high.
Trend lines on On Balance Volume are today redrawn now that there is more sideways chop to draw them across. A break above the purple resistance line would be a bullish signal. A break below the yellow support line would be a bearish signal.
RSI remains within neutral territory today. There is plenty of room for price to rise or fall.
ADX is flat today indicating the market is not trending. ATR agrees as it is strongly declining. Bollinger Bands also agree as they are contracting. With all three of these indicators in agreement, the main Elliott wave count is supported over the alternate. It does not look like a new upwards trend is in place. It looks like current movement is a consolidation within a larger downwards trend.
This consolidation has now brought Stochastics up from oversold back into neutral territory. There is again room for price to fall.
This analysis is published @ 07:36 p.m. EST.
Volume data today is light, lighter than yesterday. If this is a new upwards trend then it should have support from volume.
It does not. So I will not be swapping the wave counts over.
Price remains within the bear flag trend lines on the TA chart.
For an upwards trend to be healthy and sustainable it must be supported by volume. Buyers have to be active to push price up.
This could change if we get an upwards day with strong volume. But for now, today, the evidence in hand is more bearish than bullish still.
Unlike $Gold, GLD had slightly higher volume today than yesterday’s down day volume. Tomorrow will be key.
IMO with 1273 holding, with an upside move, Gold price should be looking to top possibly in 1286-1295 range.
A long-term gold bull wants to see this happen before he buys more
Oct 25, 2016 9:20 a.m. ET
http://www.marketwatch.com/story/wait-for-this-signal-before-buying-the-dip-on-gold-2016-10-25?link=MW_popular
He says he’ll jump back in on gold when hedge funds turn net short on gold again, just like they did in late 2015.
The chart below from JonesTrading’s Michael O’Rourke, based on the latest Commitment of Traders data, shows hedge funds and other speculators easing their long bets on gold — but only somewhat.
This is what I mean by an overshoot of the pink channel. I’ve pushed the upper trend line up to sit across the highs labelled minuette waves (ii) and (iv) higher up. Even this line is now overshot, and price may close outside of the channel.
This trend channel overshoot is now reducing the probability of this wave count.
Minute iv now looks less normal as a combination. Minuette (y) now fits as a five, not a three, and it now ends even further above the end of minuette (w).
This may be the preferred wave count (I’m going to have to wait for volume data to make a final decision on the swap).
The middle of a third wave may be approaching, but is still at least a day and likely a few days away.
The pink channel is an acceleration channel. Price may now not again come down to touch the lower edge, so I wouldn’t be waiting for that to find an entry. We may have to use a steeper trend line (cyan) but the risk here is this line is steep, not often tested and not long held so doesn’t offer good technical significance. It could be breached, yet price may then turn and continue up. But this is the best technique I can see at this stage with trend lines.
I have another entry technique outlined here. Or use your own techniques. Richard has a good one and is sometimes kind enough to share when he sees an opportunity.
Even if I move the upper edge of the channel on the main daily chart up to sit across all prior highs, it is still overshot by todays upwards movement.
This strong green candlestick certainly fits the bullish alternate much more than the main bearish wave count. If it is supported by volume then I will swap the wave counts over today.
Then we need to look for an entry point to go long.
There should be another correction coming up in another two or three days. So far the first correction lasted 4 days (minor 2), the next correction lasted 2 days (minute ii). So the next correction may last only one or two days.
Alternately, using a channel on the hourly chart may prove a better technique. Find a support line. Each time price touches it enter. Place stops using either EW counts (invalidation points) or just below support for the more adventurous.
Remember: Lara’s two Golden Rules of risk management:
1. ALWAYS use a stop. Even if it’s just mental. You need an exit strategy before each trade is placed. What would the market need to do to prove you wrong? At what point should you cut your losses?
2. Invest no more than 3-5% of equity on any one trade. Currently I’ve reduced that for my own account to 2% because I had a few losses, another risk management technique. Once I’ve got a few profits under my belt I may increase it again to 3%. This ensures your account remains solvent even if you have a series of losses.
It looks like Monday’s lows were a buy instead of a bearish signal?
Gold moved above yesterday’s high, NUGT hit high of 14.64 close to Monday’s high of 14.80
Gold and NUGT both Fired Buys today on multiple shorter time frames today 1, 5, 15, 39 minute since about 10:00 am and also longer time frames fired Buy 11:00 am Monday 39, 78, 195 minutes and still bullish today.
Pink resistance line didn’t hold.
US consumer confidence had big drop as per 10:00 am news, stock markets dropped due to that and lackluster earnings, BREXIT news also looks gloomy, gold began moving up at 10 am.
Yes, it looks like the bullish wave count is right after all.
This relatively strong green candlestick substantially reduces the probability today of the main wave count. I expect I’ll be swapping them over.
Short term target 1,305.
Gold prices rebound from a nearly 1-week low
Oct 25, 2016 11:24 a.m. ET
http://www.marketwatch.com/story/gold-steadies-as-dollars-advance-pauses-at-8-month-high-2016-10-25
Other metals stage broad climb as U.S. equities fall
Hard to see Gold price back down to 1267-66 in a hurry finding good support at 1261-60…. Wondering how much higher this can go.
I expect Syed that now we have enough information to make a stronger judgement, it looks like Gold may still be within a bull market and the last swing low was the end of a correction.
We shall see what volume has to say about that today.
Hi Lara! Many thanks.
US Consumer confidence droops ahead of presidential election
Oct 25, 2016 10:39 a.m. ET
http://www.marketwatch.com/story/consumer-confidence-droops-ahead-of-presidential-election-2016-10-25
Index falls to three-month low as jobs seen as less easy to find.
Also another article mentioned
Stock market edges lower after earnings, drop in consumer confidence
Looks like Rambus sees one more low for the miners…
https://rambus1.com/2016/10/24/hui-update-302/
GDX Technicals:
> RSI is sitting on it’s recent uptrend line after being turned down at 50. For the bulls, we need to see RSI reverse up here and move above 50.
> PRICE moved down strongly today, but may be finding support at it’s recent uptrend line and the MA 200
> VOLUME was higher today than the last 2 down days, but was still lower than last weeks 2 strong up days
> STOCHASTICS still has room to move up
>OBV appears at a key point, finding support at it’s recent uptrend line and downtrend support line that it recently broke above. It is however, below strong horizontal resistance. For the bulls, we need to see OBV reverse up here.
I’m sticking with the bull count for GDX at this time, changing the count to a nested 1-2 count. If this is correct, we should start moving up strong in a 3rd wave. A move below 22.91 would invalidate minor 2 and likely lead to a move below 22.50.
GDX – dueling H&S patterns. The large inverted H&S pattern has the power to get to our GDX target @ 41.89. The big question is whether or not we go lower first?