A small downwards day fits the preferred expectations for Gold, but all Elliott wave counts remain valid. Targets remain the same.
Summary: It still looks like another new low may unfold before Gold either turns or begins a time consuming consolidation. The target is either 1,118 or 1,116 – 1,114.
New updates to this analysis are in bold.
Last monthly and weekly analysis is here, video is here.
Grand SuperCycle analysis is here.
MAIN ELLIOTT WAVE COUNT
FIRST DAILY CHART
Click chart to enlarge.
With the many corrections along the way down since the 14th of November, there are multiple ways to see this downwards movement. Both this main Elliott wave count and the alternate below will look at two different ways to see this movement.
For this main wave count, the first way to see this downwards movement is how it has been labelled as it unfolded. Within this wave down, minuette wave (iii) within minute wave v within minor wave 3 within intermediate wave (3) has a three wave look to it, but on the hourly chart fits well as a five.
Fibonacci ratios are noted on both this daily chart and the second daily chart below. There is not enough of a substantial difference in Fibonacci ratios between the two wave counts to increase or decrease the probability of one over the other.
This wave count still has a problem of proportion between minute wave ii and minor wave 2 and intermediate wave (2). Minute wave ii should be more brief than second wave corrections one and two degrees higher, and a triangle may not be seen for a second wave in this position because second waves may not subdivide as triangles.
If this wave count is correct, then there may have been a large trend change at the end of last week. Primary wave 2 may have begun. It should last several weeks and may not move beyond the start of primary wave 1 above 1,374.81.
Primary wave 2 would most likely end about the 0.618 Fibonacci ratio of primary wave 1 at 1,273.
HOURLY CHART
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If a new trend upwards at primary degree has begun, then it should begin with a five up at the daily chart level. So far, at the hourly chart level, this wave count looks forced.
Minute wave i is seen as a five wave impulse. Within minute wave i, minuette wave (iii) looks like a three and not a five. This is sometimes acceptable when fifth waves within impulses extend as they force the fourth wave, which comes just before, to be more brief than their counterpart second waves giving the whole impulse a three wave look because the second wave correction is much more time consuming than the fourth wave. At the five minute chart level, this may have been what happened in this instance. However, it does look like the wave up from the low labelled minuette wave (ii) to the high labelled minute wave i should be seen as one complete five wave impulse and not two as necessary for this wave count.
Minute wave ii may be completing as an expanded flat correction. Within minute wave ii, minuette wave (b) is a 1.85 length of minuette wave (a). This is longer than the common range of up to 1.38 but within the allowable convention of up to 2.
Minuette wave (c) must complete as a five wave impulse. There are at least two ways to see this downwards movement today and this first hourly chart sees it as a complete five wave impulse.
Minuette wave (c) has no Fibonacci ratio to minuette wave (a).
A new high above 1,151.95 would add confidence in a trend change.
SECOND DAILY CHART
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This second idea is identical up to the spike labelled minute wave ii within minor wave 3 within intermediate wave (3). Thereafter, the subdivisions are seen differently.
Fibonacci ratios are again noted on the chart for members to compare with the first daily chart. There is no substantial difference in Fibonacci ratios between the two charts to identify one as having a higher probability than the other.
Minute wave v within minor wave 3 is seen extended; on the daily chart, seeing it this way has a perfect look. It will also fit on the hourly chart. Minute wave v now looks like a five wave impulse. This must increase the probability of this second chart over the first.
Within this labelling, intermediate wave (4) is seen over earlier. Now intermediate wave (5) is an incomplete five wave impulse, so a final fifth wave down for minor wave 5 is required.
Within intermediate wave (5), the correction of minor wave 4 may not move into minor wave 1 price territory above 1,151.95.
At 1,116 intermediate wave (5) would reach equality in length with intermediate wave (1). At 1,114 minor wave 5 would reach equality in length with minor wave 1. This gives a $2 target zone calculated at two wave degrees.
It should be expected that Gold will most likely make new lows while price remains within the yellow channel and keeps finding resistance at the upper edge. When price breaks above the channel, then Gold has most likely turned.
ALTERNATE ELLIOTT WAVE COUNT
FIRST DAILY CHART
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Downwards movement for primary wave X or 2 fits as a single zigzag.
Within downwards movement, this wave count sees a triangle labelled intermediate wave (B). This has a better fit than trying to see this as first and second waves (a second wave may not subdivide as a triangle). This wave count does not suffer from the problems of proportion that the main wave count does.
Primary wave X or 2 is now a very deep correction.
Two daily charts will be published for the alternate wave count, in the same way as two charts are published for the main wave count.
This first daily chart does not have as neat a fit as the second chart below. The key difference is within minute wave iii of minor wave 3 of intermediate wave (C).
Within this wave, minuette wave (iii) may be seen as over here, or it may also be seen as over at the next low (in the same way as the first chart for the main wave count). With this labelling another possibility is considered. This also fits on the hourly chart.
Now minuette wave (v) within minute wave iii within minor wave 3 does not have as good a look on the daily chart. This movement looks like a three, but it should be a five.
The second daily chart for the alternate, published below, has a slightly better fit.
The next wave up for the alternate wave count is either a third wave for primary wave 3 or a second zigzag for primary wave Y. This alternate wave count expects that Gold remains within a bull market, that the wave down from the 6th of July, 2016, is a very deep correction.
SECOND DAILY CHART
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If minuette wave (v) of minute wave iii of minor wave 3 of intermediate wave (C) is moved up to the prior low, now it looks like a five and not a three. This wave count for the alternate has a higher probability than the first daily chart for the alternate.
Now a final fifth wave down is required for minute wave v of minor wave 5 of intermediate wave (C). Minute wave iv may not move into minute wave i price territory above 1,151.95.
Fibonacci ratios for this idea are not as good as for the first alternate daily chart, so this reduces the probability of this wave count. Of all four daily charts, this one has the lowest probability because it has the worst Fibonacci ratios.
At 1,118 minor wave 5 would reach 0.618 the length of minor wave 1.
HOURLY CHART
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If a final fifth wave down is required, then this is how it would fit on the hourly chart. This idea also works for the second daily chart for the main wave count.
Upwards movement may be a small fourth wave correction here labelled minute wave iv, which may be complete as a double zigzag.
This provides poor alternation with the single zigzag of minute wave ii.
The final fifth wave down may now be underway. Within this final fifth wave, minuette wave (iv) may be incomplete and may not move into minuette wave (i) price territory above 1,136.95.
If price does move above 1,136.95 in the short term, before making a new low, then labelling for the downwards wave of minute wave v would be relabelled to see only minuette wave (i) within minute wave v complete, in the same way as the downwards movement can be seen on the first hourly chart. The invalidation point for this idea would then move up to 1,142.11. Minuette wave (ii) may not move beyond the start of minuette wave (i).
At this stage, price remains within the channel drawn using Elliott’s technique about minute wave v. Expect that minute wave v is continuing lower while price continues to find resistance at the upper edge of this channel. If the upper edge of this channel is breached, that would be the earliest warning that labelling of minute wave v is wrong.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price continued lower last week with slightly increased volume from the week before. The fall in price has some support last week from volume, but it is still lighter than the two prior weeks.
There is no support line for On Balance Volume at this point.
Price is at a prior area of strong support.
The longer lower wick on last weekly candlestick is slightly bullish, but we have seen this before and it did not portend a trend change.
RSI is almost oversold at the weekly chart level. This should halt the fall in price here, or very soon indeed. RSI tends to not remain oversold for long at this time frame.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A small downwards day continues to find resistance at the blue trend line. Expect new lows while price remains below this trend line.
A slight increase in volume for a downwards day is bearish. There was support for the fall in price today, but overall volume is declining.
Gold is in a downwards trend. All three moving averages are pointing lower and price is below all three.
The trend is now extreme with ADX above 35. Some signs of weakness are evident with ATR flat to declining, Bollinger Bands steady, and RSI showing divergence. Both RSI and Stochastics are oversold. This trend may end soon, and a break above the blue trend line would be a good indication it may be over.
On Balance Volume is sitting along its resistance line, now finding support there. The yellow support line is redrawn.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The gap down looks like a breakaway gap out of the bear flag pattern. Do not expect this gap to be filled short term; breakaway gaps are often not filled.
Using the measure rule, a target about 14.50 is expected.
GDX completed a downwards day with a lower high and lower low, but it closed green and the balance of volume was upwards. A slight increase in volume for upwards movement is slightly bullish.
At this stage, it looks like GDX is in a small consolidation within a larger downwards trend. The target at 14.50 will still apply.
ADX indicates a downwards trend is in place. It is not yet extreme.
ATR is now overall flat.
On Balance Volume is less clear today. The bearish signal with a break below support at the yellow line is now negated with OBV returning back above this line. A break above the purple line would be bullish.
Bollinger Bands are widening.
GDX is in a downwards trend, so I expect the target at 14.50 is fairly likely to be reached. The breakaway gap may be used as resistance.
This analysis is published @ 06:33 p.m. EST.
First hourly chart updated:
we can now add another earlier confidence point.
If price can move above 1,142.11, then 1,151.95 we may have confidence a low is in, at least mid term if not longer.
If price can break above the yellow channel that would also be a strong bullish signal.
While price has done none of these three things expect new lows as very likely.
This wave count now sees price entering a third wave at three degrees. It should be moving strongly and quickly higher. The fact that it is not doing that warns us that this wave count is likely wrong.
At least, today I don’t have confidence in it. It is a “what if?” What if I’m wrong again? What else could be happening?
Hourly Alternate II Updated:
I’m going to see the last small wave down to yesterday’s low as a complete five, this will be seen the same for both hourly charts now.
This upwards wave for today looks like a three and it’s complete.
Short term: with what looks like a five down and a three up, the trend is still likely down. Price remains within the yellow channel.
The target is now inadequate. I’ll have to recalculate it.
Hi ,
Reading the USD Hourly chart , it still needs a new high ( unless truncated ) to finish 5, (3) and starts its Pullback to its (4)
Even if this Up move can push GOLD to a new Low , it will likely be shallow within Lara’s targets .
If this USD read is correct , GOLD should be moving Down towards its established Low in the next hours .
GOLD and USDJPY are still closely correlated ( inversely ) but have lost their Hour by Hour lock- step moves .
Looking at the 3 Hourly charts , very likely , the USD and USDJPY will top and GOLD will bottom , ie the three will make major reversal at about the same time , within the same day . Of the 3 , GOLD seems the most reluctant to move – maybe the result of its smaller market and volume . So I will not be surprised if it does not make a new Low while the other 2 complete their High .
All these rest on one assumption , that the USD will make its Upmove from now ie , the way I have read it on the Hourly chart is correct ,
Regards ,
Raymomd
Bob Hoye calling for gold low 1105 by Jan 2017.
http://www.321gold.com/editorials/hoye/hoye122116.pdf
Matches with all great EW counters here???
Thanks All.
Price moved to a high of 1136.95, just short of my target of 1138 posted yesterday. If the second wave counts are correct, then we should see an imminent increasing momentum for a drop to 1118/1116/1114.
Lara, is it possible to see, as an alternative, the drop from 1142.11 to 1125.80 as minuette 1 for the Alternate Second Hourly, and the rise to 1136.95 as minuette 2? (The same idea also works for the Main Second Hourly). As your wave count stands, we would see a strong fifth down, which is common for commodities. What I don’t like is that the fourth wave rises to just touch the invalidation point.
Yes, that is exactly how I’m going to see it.
This upwards move for today is too deep and too long lasting now to look like part of the prior wave down, it looks like a new wave.
I’m speaking of the hourly chart, alternate II.
Alternate hourly is invalidated. Only main hourly is to trade ?
On BarCharts, price rose to 1136.95, exactly at the invalidation point. It hasn’t breached that, and so the second waves are still valid. I had posted another possibility just now, waiting for Lara to comment.
In fact, as it stands, I cannot relate to the first counts. The rise from yesterday’s low of 1125.80 has to be in 5 waves for these counts. But, so far, it is a distinct ABC 3 count.
The only solution I could see is a slight drop from 1136.95 (invalidation 1125.80) followed by a new high above 1136.95 to make it a 5-wave count. This we shall have to await Mr Market.
Rafael , Lara and fellow members ,
Here is the latest Weekly COT EURUSD : https://www.wellenreiter-invest.de/cot-daten/euro-us-dollar . Always outdated of course , the moment COT are released to the public every Friday nite .
For those who shot the EURO ( who isn’t ) , note the red Hedge Funds who are also shot EURO ( in the lower part of the 0- line , left scale ) . The chart shows they are buying back the Euro ( red rising ) . The price ( gray , faint ) will move with the EURO , ie EURO will rise and strengthen .
See a similar set- up in DEC15 .
On yesterday post , Lara ‘s 19 DEC GOLD report , I have posted my reading on the USD Daily . All that is needed now is a confirming Daily candle , to say that the USD may have completed its top , that I have tagged as a 5, (3) , to start a Pullback to (4) , from the present 103 to say 99 first ……. .
That will help GOLD’s case .
We can also check the COT USD here : https://www.wellenreiter-invest.de/cot-daten/us-dollar-index
The smart blue Commercials are very short the USD ( very low below the 0- line , like COT GOLD was before the Sell- off ) : If they decide to buy back the USD to cover their extreme short position , bad news for the USD . They will trigger a Sell-off to buy USD cheap . The smart Commecials always buy a falling market .
At the reversal , which is triggered by the smart Commercials , they always control the game , they will always win , the large and small Speculators ( Hedge Funds and retailers ) , dumb money , always lose back to them .
Note the position of the blue Commercial at the bottom of the chart for COT USD .
Now note the same in COT GOLD in July / Sept 16 here : https://www.wellenreiter-invest.de/cot-daten/gold . GOLD sold off .
Who called them smart and dumb money ? I closed my hedge fund account when I read about this . I rather be dumb by my own action .
I think Lara ‘s analysis are correct for both the Main and Alternate , against the market consensus calling for the death of GOLD .
GOLD is going up . One step at a time , to above 1200 to her Target at 1270 first To above 1375 /1500 ( Allan’s case (b) , in yesterday ‘s post ) , we need more evidence that we may find in GOLD and at other inter markets later . This is my main interest becos Lara’s Bearish scenario may have more waterfalls after the bounce – the smart Commercials still want to Buy more GOLD then ! .
Quick check : NIKKEI is falling now , YEN should strengthen , so will GOLD .
This correlation is quite reliable .
Thank you .
Regards ,
Raymond .
Thank you. I am still going that way. Eur/USD is very important and may bounce back.
I was watching OIL. Today I missed my trades. Situation is not clear for me. Silver is worth a trade. I buy a little. But damned gold. I await a sign of confirmation or invalidation. And more I wish that there is less correlation to currencies. And more gifts for all of us it is christmas time.
That´s all!
Lara, thank you for your frequent updates throughout the trading day.
Please clarify the 1118 gold target for intermediate wave (C) with the 14.50 GDX target. Is 14.50 GDX the same as gold intermediate wave (C), or is it a later wave?
Thank You Lara
It should be the same.
This chart shows the overhead resistance that GDX must overcome if the BOTTOM is really in. GDX must recapture the resistance trend lines around 20 or the move up will only be a bounce to be followed by new lows.
A very nice chart. Thank you Dreamer.
Yes, that orange H&S is scary indeed.
Both Gold and GDX are right at very important inflexion points here.
GDX made a new low today as expected. There could now be two options for GDX:
BULL – The bottom of this multi-month correction may be in. GDX has a lot of overhead resistance to overcome. A GAP fill and maintaining above the GAP would be a great start, then the H&S neckline @ 22.50 must be recaptured.
BEAR – A weak rally here will likely mean a new low to follow and a move back toward the BEAR market low.