The invalidation point on the daily chart was breached indicating a trend change.
Summary: It looks like Gold has had a trend change, but this will not be finally confirmed until price makes a new low below 1,214.81. Because the short side involves reasonable risk it is essential members use stops, which should be set just above 1,295.64.
Look for a second wave bounce early next week to find resistance at the lower edge of the yellow best fit channel. That may provide a good entry to go short.
New updates to this analysis are in bold.
Last monthly charts and alternate weekly charts are here, video is here.
Grand SuperCycle analysis is here.
WEEKLY CHART I
Click chart to enlarge.
At this stage, all weekly charts published expect more upwards movement. Because there is no difference in the direction expected, only this one more likely weekly chart will be published on a daily basis.
The Magee bear market trend line is added to the weekly charts. This cyan line is drawn from the all time high for Gold on the 6th of September, 2011, to the first major swing high within the following bear market on the 5th of October, 2012. This line should provide strong resistance.
At this stage, a triangle still looks most likely and has the best fit for cycle wave b.
Within a triangle, one sub-wave should be a more complicated multiple, which may be primary wave C. Primary wave C may not move beyond the end of primary wave A above 1,374.91. This invalidation point is black and white.
At this stage, it looks like primary wave C is now complete at the hourly and daily chart level. However, at the weekly chart level, it looks like is possible it may continue higher. This possibility must be acknowledged while price remains above 1,214.81. Within intermediate wave (Y), minor wave B may not move beyond the start of minor wave A.
Primary wave D of a contracting triangle may not move beyond the end of primary wave B below 1,123.08. Contracting triangles are the most common variety.
Primary wave D of a barrier triangle should end about the same level as primary wave B at 1,123.08, so that the B-D trend line remains essentially flat. This involves some subjectivity; price may move slightly below 1,123.08 and the triangle wave count may remain valid. This is the only Elliott wave rule which is not black and white.
Primary wave C may end when price comes up to touch the Magee trend line.
DAILY CHART
Click chart to enlarge.
Intermediate wave (Y) may now be a complete zigzag if it is accepted that a triangle completed in the position labelled minor wave B. This has a perfect fit on the hourly chart. So that all subdivisions can be seen, a 2 hourly chart is provided this week.
The best fit channel about intermediate wave (Y) is overshot, price has closed well below it. This indicates a possible trend change.
A new low below 1,214.81 could not be minor wave B within intermediate wave (Y) and would provide strong confirmation that intermediate wave (Y) is over. A new low below 1,214.81 would also invalidate all other weekly alternates published in last historic analysis (this is linked to above). This would provide final confirmation of this main wave count.
A common range for triangle sub-waves is from about 0.8 to 0.85 the prior sub-wave, this gives a range for primary wave D from 1,158 to 1,149.
If primary wave C is correctly labelled as a double zigzag, then primary wave D must be a simple A-B-C structure and would most likely be a zigzag. Within primary wave D, minor wave B may not move beyond the start of minor wave A above 1,295.64.
Primary wave A lasted 31 weeks, primary wave B lasted 23 weeks, and primary wave C may have been complete in 25 weeks.
Primary wave D should be expected to last at least 8 weeks (but most likely longer). The next Fibonacci ratio in the sequence would be a Fibonacci 13 and then 21.
2 HOURLY CHART
Click chart to enlarge.
This 2 hourly chart shows the whole structure of the zigzag of intermediate wave (Y). There is a reasonable Fibonacci ratio between minor waves A and C, which is just less than a 10% variation of the length of minor wave C.
The best fit channel is breached at this time frame.
There is longer term bearish divergence between price and MACD at the last high indicating weakness. MACD is now below the zero line, also bearish.
When minor wave 1 is complete, then minor wave 2 may find resistance at prior support of the lower edge of the best fit channel.
HOURLY CHART
Click chart to enlarge.
So far it does look like a five wave impulse is completing lower. Within minor wave 1, minute wave iii does not exhibit a Fibonacci ratio to minute wave i. It should be expected that minute wave v would exhibit a Fibonacci ratio to either of minute waves i or iii. Two targets are given.
When the pink Elliott channel is clearly breached on the hourly chart, that would provide strong indication that minor wave 1 should be over and minor wave 2 should be underway. At that stage, draw a Fibonacci retracement along the length of minor wave 1. If a Fibonacci retracement aligns with resistance at the lower edge of the yellow best fit channel, that should be a target for minor wave 2.
Minor wave 2 must subdivide as a corrective structure. It may not move beyond the start of minor wave 1 above 1,295.65.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The long upper wick of this weekly candlestick is bearish. Volume is bearish. Divergence between price and RSI at this last high is bearish. ATR is bearish.
Price may have found resistance just below prior strong support at 1,305 to 1,310.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The target of 1,310 calculated from the Pennant pattern may not be met.
A decline in volume for the last downwards day is slightly bullish, and the long lower wicks on the last two daily candlesticks are slightly bullish. This may precede a strong bounce.
On Balance Volume is at support. This may serve to halt the fall in price here for a bounce.
GDX
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The bearish signal from On Balance Volume today should be given weight. The upside for GDX now may be very limited or over.
Volume for the last two downwards days is light and declining. Look for a bounce in GDX early next week.
This analysis is published @ 11:25 p.m. EST on 10th June, 2017.
Hourly chart updated:
It looks like minor 1 is over and minor 2 is meandering sideways. The 0.382 Fibonacci ratio coincides with the lower edge of the channel which previously provided support, and so now that is the preferred target for minor 2.
Dreamer. Brilliant analysis of the bull and bear scenarios. I have the same counts as you for gold. My bearish case is the same as Lara’s current Main Count.
My bullish case is the same as yours, and largely similar to Lara’s Weekly II except for some minor tweaks. I would have an end target of 1452, where Primary Y = Primary W. Alternatively, it could be 1578 where Primary Y = 1.382 Primary W. I may be wrong, but in my experience, the 1.382 retrace is more common than the 1.0 for C waves. In addition, 1578 is where Cycle B = 0.618 Cycle A.
I’m looking at the moving averages, as shown in the long-term chart. At the moment, there has been a golden 50 / 200 day cross. It appears that the 100 / 200 positive crossover is going to happen soon; there is now only a 55 cent difference. If the crossover happens, it should bolster the bull case.
Do note that I’ve also drawn in the shorter-term brown trend line which I’ve been using all along. That line must hold for the bullish case. If breached, the bear case is the more likely. So, for me the jury is out until this event occurs.
Alan thanks.
I agree gold price should not violate the current short term support line. OR the price point 1195 for bullish count to stay alive. If that happens then it will be the beginning of lower low and lower highs a bearish trend def.
Thanks Alan. So many contradictions right now. Worrysome that GDX is lagging gold. I don’t think GDX will get a golden cross without an upwards breakout. Price is following the cloud down and its red going out a month.
Bollinger bands are very constricted suggesting a big move forthcoming. The bullish hope is the triangle breaking upward. GDX may give us direction soon! 🤔
Bear count:
https://www.tradingview.com/x/xm2amUVO/
Very nice work, thank you for sharing Dreamer.
The triangle could still be super cycle (b), but cycle c may be incomplete.
The last low could have been primary X, now up for a second zigzag of primary Y.
That would give the a-c trend line a nicer slope, and resolve the small problem of primary Y not moving beyond primary W for cycle c.
Yes, thanks. Will need to continue watching for the triangle to expand.
2nd Bull count:
https://www.tradingview.com/x/oQysglCG/
Let’s face it, GDX has been very difficult to trade recently. Price has been coiling for months now as an apparent triangle is forming. The challenge is determining which way the triangle will break out.
Going to share 2 counts that expect a bullish breakout in the coming weeks and another count that expects a bear breakdown coming very soon. There are likely other options.
*****Volume may be foretelling a Bear breakdown*****
First bullish count:
https://www.tradingview.com/x/aIbDTY07/
I think triangles are usually continuation patterns, and so will more often than not resume the trend from which the triangle began…
Yes, but according to “thepatternsite.com”, upwards breakouts occur 54% of the time. Not super good odds. It’s also not clear where the triangle starts. And, to complicate matters, there’s always the “around the apex” move possibility. Not easy to pin down a big triangle.
http://thepatternsite.com/st.html
@Lara, nice new header photo. Is that you rippin’?
Sadly, no 🙂
This pic was taken by Cesar recently in Raglan during a surf comp. We don’t know who the surfer is.
I thought it is you. Nice wave though!!! Seems good beach with great waves.
Thanks for sharing.
Raglan is a world class left hand point break. It’s a really awesome wave. But I live a long way away.
New Zealand is bigger than Great Britain. We just look really small all the way down at the bottom of maps (that’s because all the maps have been printed upside down 🙂 🙂 🙂 )
Upside down. Cute!
BTW, agreed, your new header photo is gorgeous.
After three days of low volume correction is generally called three days of shake out of bulls.
Two bullish candlestik chart patterns on top of each other is very bullish.
Now hold needs a long green/white candle to cover the trading range of last three to four days.
Thats the way I see it. Keeping Lara’s excellent EW analysis in mind.
What will trigger the bullish candle, I do not know.
End of Week Analysis
Data as at the close of June 9
=========================
Gold markets initially rose to a high of 1295.65, near the 1300 level. That level proved too much of a barrier. The result was a shooting star and prices fell hard, reaching as far south as 1265.05. The first sign of trouble for the bull trend was a clean drop below the psychologically important 1275 level.
My reading of the gold market is that short-term investors have turned very negative. It’s quite obvious that sellers have stepped back in. On Friday, prices rose a bit from the low of 1265.05 but the gold miners did the exact opposite: they dropped. I reckon this bleak scenario is likely to continue into next week. Now that the ECB, the Comey testimony and the UK vote are in the rear-view mirror, traders would be focusing on the Fed which is scheduled to meet this coming week, especially with the rate hike now an almost certainty. The bulls apparently have gone to prepare for hibernation, well maybe those in New Zealand where it’s now winter, congregating in a town named Bulls on the west coast of North Island.
But, Ichimoku has not yet given any signal for a trend reversal. The cloud remains green; the tenkan-sen is still lying above the kijun-sen. The only bearish sign is price straddling the tenkan-sen, with the possibility of dropping below it. The top cloud boundary is sloping downwards, allowing for further price drops. At the moment, the 1260 level ought to be supportive; if it fails, 1250 is an even stronger support. I expect a bounce from the 1260 level, if not the 1250, to occur on Monday or Tuesday. The bull could be aroused, at least for a little while. It would only be resuscitated with a surge above the last high at 1295.65, Lara’s Weekly II scenario, to which I have added a tweak. However, this possibility seems rather remote now: I would put this in the back burner for the moment. A dead cat bounce seems to be the more probable event as any rally could fizzle out at 1275, now psychologically important support turned resistance.
Following the bounce, the dead cat ought to be buried. Prices should head south once more. It should easily slice through the 1260 and 1250 supports, probably when the Fed announces its decision*. If the bottom cloud support at 1245.95 gives way, then the brown long-term trend line that I have been using would be the ultimate low. If prices do break down below that, then it would furnish a long-term sell signal, establishing an entrenched bear market. However, we are now still about $50 or so away.
* The Fed decision could work like a two-edged sword. If investors had already factored in the rate hike, then anything that is less spectacular than commonly believed would push prices much higher than anticipated, and the bullish scenario may kick in.
Alan, excellent analysis. Thank you so much, for your regular posts. Ever since I’ve actually read what you’re saying about gold, instead of focusing on petty political stuff, I like it.
My subscription is to end on Thursday, but now I’m going to re-subscribe to EWG. You are a big reason for this. As this post above clearly shows, you’re not a perma-bull or a perma-bear. You give both sides equal consideration. This is what I like best about your posts.
Will you please do an ichimoku analysis for silver, at least a weekly one, as well?
Thanks so much, once again
Alan, thanks for supplementing Lara’s analysis with your frequent updates which most certainly must be highly appreciated by a number of reticent members here. What an asset to have you here. Just goes to show the quality membership Lara has! We are in it to win it, GL all. 🙂
John. Thank you so much for your compliments. I have traded silver before but I found that market to be much more volatile than gold, and it has lower volume. As such, silver can easily be manipulated. Technical analysis can sometimes be rendered wrong rather quickly. If you must, I would suggest that you have to be nimble. The safest is to day-trade.
I have observed that silver tends to underperform gold during the late stages of bear markets as well as the early stages of bull markets. (Papudi can offer much better advice in this area as he analyses GSR). Apart from this, the charts for gold and silver do tend to be largely similar.
Let’s start with the obvious. In the daily long-term chart shown, silver is trading in a wedge formation. An imminent breakout either downwards or upwards will determine the next trend direction. To the upside, silver bulls will want to take out the 17.50 – 18.50 area where it finds both the 50-day moving average as well as the downtrend resistance. To the downside, there is the uptrend support as well as 16.06 support and of course the psychological support at the round number 16.00.
Last week, silver started out strongly, sailing past the 50-day and 200-day moving averages for the first time since April. However, Wednesday through Friday saw three straight down days, falling below both key moving averages. The question is: have we now begun a downtrend, or is this merely a correction in the uptrend?
I find it hard to think of a bullish outlook for silver this coming week, apart from the long-term fundamentals that it is highly under-valued due to long-term price suppression. I would expect continuing weakness. With the Fed meeting looming, and given the bearish sentiment as I described in the gold analysis, I would suggest watching the long-term support line closely. A drop below 16.00 will not augur well for silver. I will supplement this with the the Ichimoku analysis in a separate post. This is because I can’t post two graphs in the same post.
This was the third attempt of Silver to reclaim the 200 dsma and each attempt has so far been unsuccessful, slightly favoring the bearish case in my view. It looks like we need to go back and retrace much of the recent move up before we can get up a good head of steam. I think that critical moving average will act as support to let us know the new uptrend is the real deal. 🙂
SILVER Daily Ichimoku Analysis
Data as at the close of June 9
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The daily Ichimoku chart paints a rather ambiguous picture. On the one hand, the cloud is red for quite a significant period of time into the near-term future, signifying a bearish bent. Three red candles in the past three days hugging the bottom cloud boundary shows that prices are hanging on for dear life. On the plus side, the tenkan-sen lies above the kijun-sen, inspired by the bullish crossover 8 trading days ago.
Like gold, the silver price is straddling the tenkan-sen, with the possibility of dropping below it. The bottom cloud boundary is sloping downwards, allowing for further price drops. In the very near-term, support is in the 16.90 region, given by both the kijun-sen and the lower cloud boundary. If this fails, the supports given by classical technical analysis have to be used.
Alan, thank you so much.
This was exactly what I was looking for, an honest – unbiased analysis of silver. Your efforts are greatly appreciated.
Thank you very much Alan. It seems that again our analysis is pointing in the same direction.
Your regular posts are most appreciated.
I know Bulls. My father lives close to it 🙂
Good analysis Alan. Much appreciated!