Sideways movement was expected. An inside day for Thursday fits with this expectation.
Summary: Look now for price to move either lower for a pullback or sideways for a multi week consolidation that may last about 8 to 12 weeks. If this expectation for duration is wrong, it may be too much; the consolidation could end more quickly.
All wave counts expect that price may not make a new high above 1,357.09.
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 is for this reason that a weekly alternate wave count will be published daily.
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 triangle trend lines have a normal looking convergence. Primary wave D now looks fairly likely to be complete, and it looks like an obvious three wave structure at the weekly chart level.
Primary wave E should also be most likely to look like an obvious three wave structure at the weekly and daily chart levels. That means that within it intermediate wave (B) should be fairly time consuming.
Primary wave E would most likely end reasonably short of the upper A-C trend line. If it does not end there, then the next less likely place for it to end would be with a slight overshoot of the A-C trend line.
When primary wave E is complete, then the whole structure for cycle wave b may be complete. At that stage, a downwards breakout would be expected.
Primary wave E may not move beyond the end of primary wave C above 1,357.09.
To find out how long the current intermediate wave (B) within primary wave E may last, we may look back to other B waves within this large triangle of cycle wave b. Within primary wave A, intermediate wave (B) lasted 12 weeks. Within primary wave B, intermediate wave (B) lasted 10 weeks. Within primary wave C, intermediate wave (X) (the equivalent position to a B wave) lasted 12 weeks, and within primary wave D, intermediate wave (B) lasted 9 weeks.
The current intermediate wave (B) that has just begun within primary wave E may be expected to last about 8 to 12 weeks. However, it does not have to be this long lasting. E waves of triangles can often be the quickest of all triangle waves, and so intermediate wave (B) may last only a few weeks.
FIRST DAILY CHART
Click chart to enlarge.
This first wave count follows on directly from the weekly chart above. It looks at primary wave E underway as a single zigzag. Zigzags subdivide 5-3-5. So far only wave A of the zigzag of primary wave E may be complete.
It looks like intermediate wave (A) is over and the next wave for intermediate wave (B) has begun.
The trend lines of the triangle of intermediate wave (B) within primary wave D are extended outwards. The point in time at which triangle trend lines cross over will often see a trend change (although not always a major trend change). That may be the point in time at which primary wave E ends, or it may be where intermediate wave (B) within primary wave E ends. At today’s calculation that would be on the 4th of February.
Intermediate wave (B) so far has only just begun and may reasonably be expected to last a few weeks. It may be either a time consuming sideways consolidation, or it may be a quick sharp pullback. At this stage, it looks like a sideways consolidation.
HOURLY CHART
Click chart to enlarge.
There are more than 23 possible corrective structures that B waves may take. It is impossible to tell until they are almost complete which structure is unfolding. Analysis during B waves should focus on identifying when they are over and not on trying to pick each little swing within them. At this stage, it is possible that intermediate wave (B) could be over. But if it were, then it would be remarkably brief. What looks much more likely is it is continuing sideways.
B waves are analogous to typical range bound consolidations or sharp pullbacks.
Because there are still multiple structural options for intermediate wave (B), it must be expected that as it continues further the labelling within it will change at the hourly chart level.
At this stage, it looks like a three wave structure downwards was complete from the high labelled intermediate wave (A). This is labelled minute wave a.
This looks to be followed by a three upwards; minute wave b now looks like a double zigzag. These are very common structures.
With a three down and not a three up following it, a flat correction is indicated as most likely. The most common type of flat correction is an expanded flat where minute wave b would reach 1.05 the length of minute wave a or longer. The most common range for minute wave b within a flat correction would be from 1 to 1.38 times the length of minute wave a, giving a range from 1,325.56 to 1,331.74.
If minor wave A is unfolding as a flat correction, then the larger correction for intermediate wave (B) may be either a flat correction, double combination or double flat. All of these structures begin with a three, which would be the flat correction of minor wave A.
SECOND DAILY CHART
Click chart to enlarge.
It is possible that within the large triangle for cycle wave b primary wave D may still be incomplete. Within primary wave D, intermediate wave (B) may be complete as a flat correction.
The target for intermediate wave (C) would see primary wave D have a normal length to primary wave C.
Intermediate wave (B) should now be over and intermediate wave (C) should now have begun. Within intermediate wave (C), no second wave correction may move beyond the start of its first wave above 1,325.56.
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.
Within intermediate wave (C), minor wave 2 may not move beyond the start of minor wave 1 above 1,357.09.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Now that price has again broken above resistance at 1,305 to 1,310, that area may now provide support. Next resistance is about 1,345.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Short term volume today is bearish, but so far within the consolidation it is the upwards day of 10th of January that has strongest volume and an eventual upwards breakout at this stage is indicated.
With RSI and Stochastics both overbought and both exhibiting divergence with price, and ADX extreme, it still seems reasonable to expect a consolidation to relieve extreme oversold conditions here.
Resistance so far is about 1,330 and support is about 1,310 – 1,305.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
It looks like GDX too has either ended its upwards trend, or has begun a consolidation or pullback here. Look for support about 23.00.
Published @ 07:50 p.m. EST.
Yeah, same as my graph, Gold already breached the monthly downward channel (created by monthly and weekly candlestick) for several weeks, and price is climbing up along the monthly supporting upward trend line
Surf’s cycle work supports a move up in gold
https://surfcity.co/2018/01/12/golds-weekly-200ma/
Whether you call it a 4+ year consolidation, a rounded bottom, or an inverted H&S pattern, it looks like a breakout is brewing to the upside!
Good read from the Daily Gold
https://thedailygold.com/one-big-potential-catalyst-for-gold-in-2018/
“higher long-term yields are bullish when they rise faster than short-term yields. That is a steepening of the yield curve and indication of inflation.”
IMHO, inflation will drive gold higher. Stock Market will top due to the “everything bubble” and rising costs to service debt. Gold will top sometime after the stock Market does kinda like the 2007 to 2009 timeframe. Big stock bear and big gold bear followed by big bull moves.
Dreamer
Thanks for many educational posts.. I enjoy reading them.
Rising long tern rate is not the reason for gold bullishness. It is the rate of rising long term over the short end.
The ratio of long term to short term rate ($TYX/$FVX or $TNX/$UST2Y) impacts PM sector.
A recent post in Gold ten had article about this from TSI blog.
https://goldtadise.com/?p=420769
From the chart you will see how well the ratio has co-related to gold/SGR/miners ratio.
As rates ratio went sideways gold was sideways. Now PM is defying the rates ratio means a turn in rates ratio is about to turn upward.
Yes Thanks I read Goldtent daily. Good site 😀
this could be just a longer intermediate A than we thought
I really don’t want to see minor 4 there, it too clearly breaches a channel which would be drawn about the prior upwards movement.
I think intermediate wave (B) was over much much more quickly than expected.
Oil is looking like one of the clearer wave counts at the moment.
I think Oil may have just made its first five wave down and now retracing in wave 2
Lara, bearish $USD seems to be challenging your bear gold count. Any bullish alternatives?
What about moving the big triangle down a degree so that the entire triangle is Primary B with an upward breakout for Primary C to complete Cycle b up?
Just a thought. Thanks 🤔
That is possible… it would see cycle b as maybe a double zigzag.
I’d still want to see primary W as a zigzag, it fits so much better as a three, rather than trying to see it is an impulse and labelling it primary A.
But this idea still needs price to turn downwards here to complete the triangle.
Dreamer, I’m looking and looking for a bullish wave count.
If I find a solution I’ll publish it. But for now… can’t find it.
Thanks Lara. Something to watch 😳
USD probably bottomed today. 🙂
Big down day. Maybe a short term bottom, but I think more down before a bigger correction up. Trend is down. Dollar is 🤒
Dreamer,
A major question!
If Gold goes up now to complete a Cycle b, it will still need to come down for its Cycle c. Whether Cycle a-b-c is a flat, extended flat or worse yet a zigzag what would be the driver behind the huge move down especially after the long consolidation at current levels?
However, if it is at all possible to see the correction from 2012 as some sort of a W-X-Y, would that complete the correction for gold so that the move up since 2016 is part of a new bull trend up? I believe the 5th wave of the prior bull run was extended and the correction since 2012 went a little past the 2nd wave of that extended 5th and pretty close to the 4th wave of the same degree.
I am neither an Elliott Wave expert nor an economist, so if my question is outright stupid, kindly pardon me. As well, if this question was already discussed and dropped in this forum, kindly excuse me.
Thank you kindly.
There is another problem too.
The up move after 2016 bottom was a 3 !!!
A-B-C or W-X-Y for Cycle b, there can still be another strong leg up
David, nothing stupid for sure. You are a deep and big picture thinker. So many EW patterns are possible. I think I may have answered with my opinions regarding gold up, then down catalysts over the next few years in my post above with the Daily Gold link. 🤓
Thank you for yor kind words Dreamer.
I had to read the article a few times and it makes great sense.
Thank you kindly.
China start crude oil future trading on the coming 18th January in RMB in Shanghai , Russia and Sadi Arab were invited and they accept to take RMB rather than USD, they support this change, in addition, the excess RMB cash received, they could buy gold in RMB. US no more able to control the gold price to retain their USD value. So I think Gold may not take the bearish side, it may already on the way of Bullish road.
China start crude oil future trading on the coming 18th January in RMB in Shanghai , Russia and Sadi Arab were invited and they accept to take RMB rather than USD, they support this change, in addition, the excess RMB cash received, they could buy gold in RMB. US no more able to control the gold price to retain their USD value. So I think Gold may not take the bearish side, it may already on the way of Bull road.
Thank you Chin Lok Ho. Very interesting.
So, with the excess RMB these countries can buy gold from China ?
Thank you kindly.
Yes, that’s what I heard from some short vedio news in You Tube, it speak in Chinese, I believe those vedio made delibrately by government, other countries could buy gold through the Shanghai precious metal market, it is open market, like spot gold price, and the exchange market held in there I think. Actually, Hong Kong exchanges
Thank you Chin Lok Ho.
America may gonna destroys China soon with war as like America did before, to destroy Lybia and Iraq, since those 2 countries tried to shake the petroleum dollar podium years before. If war or international panic occurs, US will start raise dollars interest rate to lure their dollar back to US.
Thank you Chin Lok Ho. America may not destroy China militarily. Its military is already too stretched out to take on another one right now, especially of China’s size.
Commercial war might work if done astutely. Unfortunately the current administration’s isolation policies are actually helping China advance in the world stage.
So, the stage is all set for a change of guard.
David, the consensus amongst most analysts is that China will not be exchanging it’s gold for oil. The choice is up to the seller of the oil. Take RMB or enter into a swap for delivery in gold, since there is a gold/RMB contract already in place. This would be from “western” supplies, so potentially quite bullish. To what extent this would occur is probably not that great at present. Trading partners would probably be content to diversify forex holdings.
If you want to read some more try Alistair MacLeod. His macro analysis is pretty good IMO.
https://www.goldmoney.com/research/goldmoney-insights/2018-could-be-the-year-for-gold
Thank you, thank you, thank you Stuart.
Thank you for the link, I shall watch it now.
That was the point behind my question earlier about China selling gold = China’s source. It’s stockpile = increased supplies and bearish for western gold prices. But, additional demand on “western” supplies is good. Past a certain level of containment physical demand has to show up in the “paper” markets.
Thank you kindly, Stuart.
That is in fact official Chinese policy…not a single ounce in government control, including every ounce mined in China, leaves China. Makes sense as they ultimately plan to issue a Gold-backed Yuan.
The appearance of a gold backed Yuan would be the death knell for USD, finally. The poor green beast has been on its death bed ever since Nixon severed its arterial bond with gold in 1973!!
In the interim low Gold prices would certainly help China add to its stockpile, using funds freed from its sale of US treasuries that it has held for so long to keep the yuan pegged down. Win-win for China.
Pretty interesting times we live in – if you have deep pockets!!
Some time in the next decade or two, $USD will likely lose its sole role as the worldwide reserve currency. It’s starting…
Thanks to Cesar for adding back the “Home” tab. Really helps when using my iPhone 😀😃😄😁😆
A few ideas for the ongoing Bitcoin correction for those interested. Just studying Bitcoin. Have never traded…
Some argue that Bitcoin is the “new” gold since it fits better as a store of value and not a currency. I’m sure there will be a consolidation in cryptos at some time (too many) and they will find their place in the ecosystem and the trading action will settle down somewhat. May be some time in the future.
https://www.tradingview.com/x/MnLXADIk/
Gold will come hurtling down through the Magee downtrend line, just like it went shooting past it a few weeks. That would see gold unable to hold above the all important Magee downtrend line one more time.
USD has been holding strong at the 91 -92 level, refusing to drop, which adds to gold’s imminent fall and USD’s rise.
Divergences and declining volume supports this view.
Yep! 🙂
I’ll add that trend line back to weekly charts.
It’s not really being well respected, although intermediate (B) within primary D did see resistance there.