A strong candlestick pattern indicates the next consolidation has arrived, $10 short of the target.

Summary: A multi day to multi week consolidation looks likely to have begun here. It may be a sideways consolidation to last one to two weeks, remaining below 1,282.20.

When the consolidation is complete, then a final wave down to a final low is expected. The mid term target is 1,216 – 1,211. Downwards movement may be limited to no lower than 1,123.08.

Always trade with stops to protect your account. Risk only 1-5% of equity on any one trade.

New updates to this analysis are in bold.

Grand SuperCycle analysis is here.

Last historic analysis with monthly charts and several weekly alternates is here, video is here.

There are six weekly charts published in the last historic analysis. All but two expect more downwards movement at this time; the two bullish wave counts would be invalidated below 1,236.54, which may happen within the next 24 hours. Because the remaining four bearish wave counts all expect the same movement next only one shall be published on a daily basis. Members should keep the other wave counts in mind. They will be published on a daily basis if they begin to diverge from the triangle wave count.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART – TRIANGLE

Click chart to enlarge.

The triangle so far has the best fit and look. If price shows a combination or flat may be more likely, then those ideas may be published on a daily basis. The flat and combination ideas expect movement reasonably below 1,123.08, or perhaps a new low below 1,046.27.

Cycle wave b may be an incomplete triangle. The triangle may be a contracting or barrier triangle, with a contracting triangle looking much more likely because the A-C trend line does not have a strong slope. A contracting triangle could see the B-D trend line have a stronger slope, so that the triangle trend lines converge at a reasonable rate. A barrier triangle would have a B-D trend line that would be essentially flat, and the triangle trend lines would barely converge.

Within a contracting triangle, primary wave D may not move beyond the end of primary wave B below 1,123.08. Within a barrier triangle, primary wave D may end about the same level as primary wave B at 1,123.08, so that the B-D trend line is essentially flat. Only a new low reasonably below 1,123.08 would invalidate the triangle.

Within both a contracting and barrier triangle, primary wave E may not move beyond the end of primary wave C above 1,365.68.

Four of the five sub-waves of a triangle must be zigzags, with only one sub-wave allowed to be a multiple zigzag. Primary wave C is the most common sub-wave to subdivide as a multiple, and this is how primary wave C for this example fits best.

Primary wave D must be a single structure, most likely a zigzag.

One triangle sub-wave tends to be close to 0.618 the length of its predecessor; this gives a target for primary wave D.

There are no problems in terms of subdivisions or rare structures for this wave count. It has an excellent fit and so far a typical look.

DAILY CHART – TRIANGLE

Click chart to enlarge.

Primary wave D may be unfolding lower as a single zigzag, and within it intermediate waves (A) and (B) may be complete.

The target is widened to a $5 zone calculated at two degrees. This should have a reasonable probability.

Within intermediate wave (C), it looks likely that all of minor waves 1, 2 and 3 may now be over. Minor wave 4 may have begun at today’s low.

Minor wave 2 fits as a double zigzag, and was shallow. Given the guideline of alternation, minor wave 4 may most likely be a flat, combination or triangle; it may be very shallow, but more likely it may be deep in order to exhibit alternation with minor wave 2.

Minor wave 2 lasted 18 days, and it shows up on the weekly chart. Fourth waves for Gold are often quicker than second waves; minor wave 4 may last about one or two weeks.

Minor wave 4 may not move into minor wave 1 price territory above 1,282.20.

Adjust the channel to fit as an Elliott channel drawn using Elliott’s first technique. If it is long lasting enough, then minor wave 4 may find resistance about the upper edge of this channel.

HOURLY CHART

Click chart to enlarge.

The first wave of all of a flat, combination or triangle must subdivide as a three. It is most commonly a zigzag.

So far a zigzag may be unfolding higher. This may be minute wave a, or it may only be minuette wave (a) if minute wave a unfolds as a flat correction. The degree of labelling may need to be adjusted as this correction unfolds.

Minor wave 4 may end about the 0.382 Fibonacci ratio at 1,265. If it is deeper, then the next target for it to end may be about the 0.618 Fibonacci ratio which is at 1,281.75.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

On Balance Volume has made a new swing low last week below the prior swing low, but price has not. On Balance Volume should be read as a leading indicator, so this is bearish and indicates price may likely follow through with a new swing low below 1,238.30.

The long lower wick on the last weekly candlestick is a little bullish, but it is not long enough to expect a low is likely to be in place here.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

A strong bullish daily candlestick with support from volume now strongly indicates a low in place, at least temporarily. This candlestick is not fully engulfing the prior real body because it gaps open higher. The most important aspect of a bullish engulfing candlestick pattern is the close of the second real body: it must be above the open of the first real body. Here, that condition is met. This candlestick is very bullish. It will be read as a reversal pattern.

A trend change from down to either up or sideways may happen here to resolve extreme oversold conditions.

There was no warning prior to the candlestick reversal pattern on the daily chart. Neither RSI nor Stocahstics exhibited reasonable bullish divergence with price at lows.

GDX WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

Support about 20.80 has been tested about eight times and so far has held. The more often a support area is tested and holds, the more technical significance it has.

In the first instance, expect this area to continue to provide support. Only a strong downwards day, closing below support and preferably with some increase in volume, would constitute a downwards breakout from the consolidation that GDX has been in for a year now.

Resistance is about 25.50. Only a strong upwards day, closing above resistance and with support from volume, would constitute an upwards breakout.

An upwards week last week has some support from volume and a long lower wick. It looks likely that GDX may move higher next week.

GDX DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

A bullish signal today from On Balance Volume should be given weight in this analysis. The long upper wick signals downwards movement for tomorrow, but the bullish signal indicates overall more upwards movement here.

Published @ 10:32 p.m. EST.