A target for another day or so was 1,264. Price moved higher to reach 1,261.40 before turning down.
Summary: A multi day bounce for minor wave 2 has arrived.
The target for minor wave 2 is still 1,268, which may be met in another two or five days.
Short positions opened on or before 1st of December, and particularly any short positions opened above 1,287.61, may still be held for traders with a longer term horizon.
The trend for now is down. Bounces are opportunities to enter the trend. All trades should remain with the trend.
Always trade with stops and invest only 1-5% of equity on any one trade.
New updates to this analysis are in bold.
Last monthly charts for the main wave count are here, another monthly alternate is here, and video is here.
Grand SuperCycle analysis is here.
MAIN ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
All wave counts expect that Gold completed a large five down from the all time high in November 2011 to the low of December 2015, which is seen on the left hand side of both weekly charts.
If this analysis is correct, then the five down may not be the completion of the correction. Corrective waves do not subdivide as fives; they subdivide as threes. The five down is seen as cycle wave a within Super Cycle wave (a).
All wave counts then expect cycle wave b began in December 2015.
There are more than 23 possible corrective structures that B waves may take. It is important to always have multiple wave counts when B waves are expected.
It looks unlikely that cycle wave b may have been over at the high labelled primary wave A. Primary wave A lasted less than one year at only 31 weeks. Cycle waves should last one to several years and B waves tend to be more time consuming than other Elliott waves, so this movement would be too brief for cycle wave b.
This wave count looks at cycle wave b to be most likely a regular contracting triangle.
The B-D trend line should have a reasonable slope for this triangle to have the right look, because the A-C trend line does not have a strong slope. A barrier triangle has a B-D trend line that is essentially flat; if that happened here, then the triangle trend lines would not converge with a normal look and that looks unlikely.
Primary wave D should be a single zigzag. Only one triangle sub-wave may be a more complicated multiple, and here primary wave C has completed as a double zigzag; this is the most common triangle sub-wave to subdivide as a multiple.
Primary wave D of a contracting triangle may not move beyond the end of primary wave B below 1,123.08.
At its completion, primary wave D should be an obvious three wave structure at the weekly chart level.
For this one weekly chart, two daily charts are presented below. They look at intermediate wave (B) in two different ways, and are presented now in order of probability.
DAILY CHART
Click chart to enlarge.
Both daily charts are identical up to the low labelled intermediate wave (A).
This first daily chart shows intermediate wave (B) as a now complete regular contracting Elliott wave triangle. This has support from what looks like a classic downwards breakout from the symmetrical triangle identified on the technical analysis chart below.
The target assumes that intermediate wave (C) may exhibit the most common Fibonacci ratio to intermediate wave (A).
Intermediate wave (C) must subdivide as a five wave structure. Within intermediate wave (C), minor wave 1 may now be complete.
Minor wave 2 so far has lasted only three days while minor wave 1 lasted seven days. Minor wave 2 may continue higher and be slightly longer lasting for the wave count to have a better look. It may continue for another two days to total a Fibonacci five.
It is also possible that minor wave 2 could be over, and this is considered as an alternate below.
Intermediate wave (A) lasted twenty sessions. Intermediate wave (C) may be about even in duration as well as length, so twenty or twenty-one sessions looks likely.
At its end, minor wave 2 may present an opportunity to join the downwards trend in time to catch a third wave down.
HOURLY CHART
Click chart to enlarge.
It is possible that minor wave 2 is not over and is continuing higher as a double zigzag.
If price makes a new low below 1,253.39 (the low labelled minuette wave (a) ) and then turns higher, then more confidence may be had in this wave count.
A double zigzag unfolds when the first zigzag does not move price deep enough. A second zigzag is then needed. Double zigzags normally have a strong slope against the prior trend. To achieve this slope their X waves are normally brief and shallow.
FIRST ALTERNATE HOURLY CHART
Click chart to enlarge.
Minor wave 2 may now be a complete zigzag. It subdivides as a 5-3-5, and lasts a Fibonacci three days. It may now be over.
However, the breach of the lower edge of the pink Elliott channel is not by clear downwards movement.
A new low below 1,236.54 would provide some confidence in this wave count.
The target fits with the lower target for intermediate wave (C).
SECOND ALTERNATE HOURLY CHART
Click chart to enlarge.
Moving the degree of labelling within minor wave 2 all down one degree, it may be that only minute wave a of a larger flat correction may be complete.
The most common range for minute wave b within a flat correction is from 1 to 1.38 the length of minute wave a.
Minute wave b must subdivide as a corrective structure.
SECOND DAILY CHART
Click chart to enlarge.
It is very important to always consider an alternate when a triangle may be unfolding. Triangles are very tricky structures, and may even be invalidated after one thinks they are complete.
It is still possible that intermediate wave (B) may be completing as a flat correction.
Within the flat correction, both minor waves A and B are threes. Minor wave B has retraced more than the minimum 0.9 length of minor wave A.
With minor wave B now a 1.54 length to minor wave A, an expanded flat is now indicated. Minor wave C of an expanded flat would most commonly be about 1.618 the length of minor wave A.
Now minor wave C may be required to move price upwards to end at least above the end of minor wave A at 1,305.72 to avoid a truncation.
A new high above 1,298.70 is required now for confidence in this wave count. If the upwards wave does not reach up to 1,298.70, then this second wave count will be discarded.
There should be something wrong or “off” about B waves. In this instance, the downwards wave of the last two weeks has some strength. While the market is falling of its own weight, On Balance Volume is very bearish. Classic technical analysis does not support this wave count, so it looks unlikely now.
ALTERNATE ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
All wave counts are identical to the low labelled cycle wave a. Thereafter, they look at different possible structures for cycle wave b.
Cycle wave b may be a flat correction. Within a flat primary, wave B must retrace a minimum 0.9 length of primary wave A at 1,079.13 or below.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The market is falling of its own weight. Next support is about 1,225.
The small real body of this weekly candlestick puts the trend from down to neutral.
The support line for On Balance Volume is redrawn. A bounce up this week may be bullish.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Upwards movement lacks volume and has no strong candlesticks. Friday’s candlestick has a long upper wick and small body; this is bearish.
On Balance Volume gives a bullish signal, but overall remains bearish as it has not made a new high.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Lighter volume for Friday, with a balance of volume downwards, is bullish short term. The doji candlestick looks like a small pause within an upwards bounce.
It looks like price is going to break above resistance here about 22.20. Next resistance is about 22.80, the downwards sloping trend line from the descending triangle.
Published @ 07:18 p.m. EST on 16th December, 2017.
Lara,
If at all possible could you kindly do an update on GDX video, please. The last one from October had three possible wave counts and I am not quite sure which one is panning out now.
Would sincerely appreciate your help.
Thank you kindly.
This is unfolding as expected which is very nice to see.
I’m going to consider a single zigzag too for minor 2, will see how that looks.
Either way, the 0.618 Fibonacci ratio may be met shortly. And either way, the channel here will be the same.
So now the most important thing in this chart folks is that yellow best fit channel.
While price remains within the channel assume it can keep going up. When / if price breaks below the lower edge of the channel with clearly downwards (not sideways) movement, then assume minor 2 is over and then enter short for minor 3. Stops may then be set just above the last high which would be the end of minor 2.
Then hold on for a third wave down.
When minor 2 is complete I can then calculate a target down for minor 3 to end. I can’t do that yet, as I don’t know where it starts.
As always, remember, I am wrong sometimes which is why your risk management is so very important.
Risk management is the most important aspect of trading.
I am quite serious when I keep telling you to always use stops, and invest only 1-5% of equity on any one trade. This is based on math, the Theory of Runs. That allows you to have a series of 10 losses in a row (worst case scenario) with your trading account surviving to trade another day.
Getting positioned for a possible third wave down via GLD Jan 118.50/119 bullish put credit spreads. Minor two should complete this week and with confirmation of the next wave down 119 puts will be exited. Best of trading fortunes to all! 🙂
Thanks for sharing your plan with us Verne 🙂
Most welcome!
Got filled on my first batch today at desired credit though I had to be patient.
Count looking beautiful. Hoping to get remaining tranche filled tomorrow! 🙂