Sideways movement continues. The short term picture at the hourly chart level is now changed with changing market conditions. With the high remaining in place, the main wave count is the same at the daily chart level.

Summary: The main wave count expects a trend change to a new bear market to last one to several years, and the target is 470.

Full confidence may be had in the new bear market if price can make a new low below 1,236.54 in the next few weeks.

An alternate expects overall upwards movement from here. It would be confirmed if price makes a new high reasonably above 1,357.09.

New updates to this analysis are in bold.

Last historic analysis with monthly charts is here. Video is here.

Another alternate monthly chart is here.

Grand SuperCycle analysis is here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

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All main 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 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).

Cycle wave b began in December 2015.

This wave count looks at cycle wave b to be most likely a regular contracting triangle.

All sub-waves must subdivide as threes within an Elliott wave triangle, and four of the five sub-waves must be zigzags or multiple zigzags, and the most common sub-wave to be a multiple is wave C. Only one sub-wave may be a more complicated multiple. This triangle meets all these rules and guidelines; all subdivisions fit perfectly at all time frames. It is the main wave count for these reasons, and thus is judged to have the highest probability.

The triangle trend lines have a normal looking convergence.

While primary wave E should also most likely look like an obvious three wave structure at the weekly and daily chart levels, it does not have to do this. It is possible that primary wave E could be over, falling reasonably short of the A-C trend line and being relatively quick. E waves of triangles can be the quickest of all triangle waves.

DAILY CHART

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This first daily chart follows on directly from the weekly chart above. The triangle for cycle wave b may have just recently completed.

Primary wave E fits as a completed zigzag and falls reasonably short of the A-C trend line, the most common point for E waves of Elliott triangles to end.

If this wave count is correct, then price needs to move strongly lower next week. Within the new trend, no second wave correction may move beyond the start of its first wave above 1,343.97.

The target for cycle wave c to end assumes the most common Fibonacci ratio to cycle wave a.

A new low below 1,236.54 would invalidate weekly alternate wave counts and provide a high level of confidence in this main wave count.

HOURLY CHART

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The duration of current sideways movement now looks to be too large to be a lower degree correction. Analysis of recent movement from the last high is changed today.

There may have been a first wave down complete at the last small swing low labelled minute wave i.

Current sideways movement may be part of minute wave ii.

Gold very commonly exhibits very deep second wave corrections for a new trend. Minute wave ii is already deeper than the 0.618 Fibonacci ratio of minute wave i and the structure is incomplete. If minuette wave (c) were to reach equality in length with minuette wave (a), then minute wave ii would break the Elliott wave rule stating it may not move beyond the start of minute wave i above 1,343.97. The target calculated for minuette wave (c) uses the next likely Fibonacci ratio.

When minute wave ii is a complete zigzag, then the next wave down for minute wave iii would be expected to exhibit an increase in downwards momentum.

SECOND WAVE COUNT

WEEKLY CHART

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If cycle wave b is a single zigzag, then the upwards wave labelled here primary wave A must be seen as a five wave structure. But this is problematic because (within primary wave A) intermediate wave (4) lasted 12 weeks whereas intermediate wave (2) only lasted 2 weeks. While disproportion between corrective waves does not violate any Elliott wave rules, it does give a wave count the wrong look.

Gold is typical of commodities in that it often exhibits swift strong fifth waves, leading to blowoff tops in bull markets and selling climaxes in bear markets. This tendency is most often seen in Gold’s third waves. When this happens the strong fifth wave forces the fourth wave correction that comes before it to be more brief and shallow than good proportion to its counterpart second wave would suggest. When this happens the impulse has a curved three wave look to it at higher time frames.

It is acceptable for a wave count for a commodity to see a curved impulse which has a more time consuming second wave correction within it than the fourth wave correction.

The impulse has a more time consuming fourth wave than the second in this case though, giving the wave the look of a zigzag. This is unusual, and so the probability of this wave count is low.

Low probability does not mean no probability, so this wave count is possible; when low probability outcomes do occur, they are never what was expected as most likely.

Primary wave C must subdivide as a five wave structure, either an impulse or an ending diagonal. Because the upwards wave of intermediate wave (1) fits as a zigzag and will not fit as an impulse, an ending diagonal is considered.

Ending diagonals require all sub-waves to subdivide as zigzags.

Within intermediate wave (1), to see this wave as a zigzag, minor wave B is seen as a double flat correction. In my experience double flats are extremely rare structures, even rarer than running flats. The rarity of this structure further reduces the probability of this wave count.

Intermediate wave (3) must move beyond the end of intermediate wave (1) above 1,357.09.

Intermediate wave (3) must subdivide as a zigzag. Within the zigzag, minor wave B may not move beyond the start of minor wave A below 1,236.54. At this stage, the last four days of sideways movement look like a correction within an ongoing upwards trend which would favour this alternate wave count. Minor wave B may last from just a few days to a few weeks.

THIRD WAVE COUNT

WEEKLY CHART

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Cycle wave a is still seen as a completed five wave structure. This third wave count looks at cycle wave b as a possible double zigzag.

A triangle may be completing as an X wave within a double zigzag for cycle wave b.

Now the upwards wave labelled here primary wave W is seen as a zigzag. This has a better fit than the first alternate.

Within the triangle for primary wave X, intermediate waves (A) through to (C) may be complete. Intermediate wave (D) may also be complete, but there is room for it to still move higher. If the triangle for primary wave X is a regular contracting triangle, then intermediate wave (D) may not move beyond the end of intermediate wave (B) above 1,357.09. If the triangle is a barrier triangle, then intermediate wave (D) should end about the same level as intermediate wave (B), so that the (B)-(D) trend line remains essentially flat. In practice, this means that intermediate wave (D) may end slightly above 1,357.09 and this wave count would remain valid.

This is why a new high reasonably above 1,357.09 only would invalidate this wave count. This invalidation point is not black and white.

The final sub-wave of intermediate wave (E) may have now begun. Intermediate wave (E) may not move beyond the end of intermediate wave (C) below 1,236.54. This invalidation point is black and white. A new low by any amount at any time frame would invalidate this wave count.

TECHNICAL ANALYSIS

WEEKLY CHART

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Price found resistance last week, at about 1,345.

The small spinning top candlestick and decline in volume suggest a pause within an upwards trend, or a weak end to the upwards trend.

Stochastics may move further into overbought territory before price turns.

DAILY CHART

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The very short term volume profile now looks a little more bearish, with some increase in volume for the last downwards session and reasonable volume for the first downwards session.

It still looks like a small flag pattern may be forming though. Flag patterns are continuation patterns, and this view would favour the second weekly chart, which is bullish.

GDX DAILY CHART

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It looks like price may have turned for GDX. Look for price to move lower to support while Stochastics moves lower towards oversold. Look for next support about 22.00.

Published @ 06:24 p.m. EST.