Another small range day fits short-term expectations. All Elliott wave counts remain valid.

Summary: A multi-week consolidation may continue, which may not move below 1,201.14.

Risk to any long positions here remains at 1,201.14.

This week may see a downwards swing which could be the last swing within this consolidation.

Resistance is about 1,240 – 1,245. Support is about 1,215 – 1,220.

The final target for this bounce to end is at strong resistance about 1,305 – 1,310.

New updates to this analysis are in bold.

Grand SuperCycle analysis is here.

Last historic analysis with monthly charts is here.

There are four remaining weekly wave counts at this time for cycle wave b: a triangle, a flat, a combination, and a double zigzag.

At this stage, they will now be presented roughly in order of probability. The triangle and the double zigzag wave counts have about an even probability; the combination and flat wave counts now look less likely.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART – TRIANGLE

Click chart to enlarge.

Cycle wave b may be an incomplete regular contracting triangle. Primary wave E may not move beyond the end of primary wave C above 1,365.68. Within primary wave E, intermediate wave B may not move beyond the start of intermediate wave A below 1,160.75.

Four of the five sub-waves of a triangle must be zigzags, with only one sub-wave allowed to be a multiple zigzag. 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 E would most likely be a single zigzag. It is also possible that it may subdivide as a triangle to create a rare nine wave triangle.

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.

Primary wave E may now continue higher as a large three wave structure.

DAILY CHART – TRIANGLE

Click chart to enlarge.

Primary wave E should now be underway for this wave count.

Primary wave E should subdivide as a zigzag. Intermediate wave (A) should subdivide as a five wave structure.

Within intermediate wave (A), so far minor waves 1 through to 3 may now be complete. Minor wave 3 exhibits no Fibonacci ratio to minor wave 1. Minor wave 2 was a relatively shallow 0.497 flat correction.

Part of minor wave 4 has made a new price extreme beyond its start. Minor wave 4 may now not be unfolding as a zigzag. It may be unfolding as a flat, combination or triangle.

Minor wave 4 may not move into minor wave 1 price territory below 1,201.14.

Minor wave 2 lasted 27 sessions. Minor wave 4 may exhibit reasonable proportion to minor wave 2; it may last about a Fibonacci 21 or 34 sessions. So far it has lasted only 9 sessions, which looks too brief for it to be complete.

Draw the channel about intermediate wave (A) using Elliott’s first technique. Draw the first trend line from the ends of minor waves 1 to 3, then place a parallel copy on the end of minor wave 2. If it is time consuming enough, then minor wave 4 may find support about the lower edge of this channel. Upwards movement so far within minor wave 4 has found strong resistance about the upper edge of this channel.

A target for primary wave E is the strong zone of resistance about 1,305 to 1,310. Primary wave E is most likely to subdivide as a zigzag (although it may also subdivide as a triangle to create a rare nine wave triangle), and it should last at least a Fibonacci 13 weeks. It may also last a total Fibonacci 21 or 34 weeks. So far it has lasted only 11 weeks. Primary wave E may not move beyond the end of primary wave C above 1,365.68.

HOURLY CHART – TRIANGLE

Click chart to enlarge.

Minor wave 4 may have begun with a three wave structure, an expanded flat correction. This flat correction may be labelled as either minute wave a or minute wave w.

When the first wave within a correction subdivides as a three, then the correction is indicated as either a flat, combination or triangle.

If minor wave 4 unfolds as a flat correction, then within it minute wave b must retrace a minimum 0.9 length of minute wave a at 1,236.34. This minimum has now been met. The most common length for minute wave b would be 1 to 1.38 times the length of minute wave a, giving a range from 1,239.02 to 1,249.19.

If minor wave 4 unfolds as a double combination or a double flat, then minute wave w may be a complete flat correction. Minute wave x upwards now only needs to subdivide as a corrective structure; it has no minimum nor maximum required length.

If minor wave 4 unfolds as a triangle, then minute wave a may be a completed flat correction. Four of the five sub-waves of a triangle must subdivide as zigzags or zigzag multiples, so one triangle sub-wave may be another type of corrective structure; occasionally A waves can subdivide as flats. A triangle would see sideways movement in an ever decreasing range for at least another couple of weeks but probably longer. Minute wave b within a triangle has no minimum requirement.

Minute wave b or x looks like it may be unfolding as a zigzag. When minute wave b or x is complete, it would most likely look like a three wave structure. Within minute wave b or x, minuette wave (b) may be incomplete.

Overall, minor wave 4 may be expected to continue for a few more weeks.

WEEKLY CHART – DOUBLE ZIGZAG

Click chart to enlarge.

It is also possible that cycle wave b may be a double zigzag or a double combination.

The first zigzag in the double is labelled primary wave W. This has a good fit.

The double may be joined by a corrective structure in the opposite direction, a triangle labelled primary wave X. The triangle would be about three quarters complete.

Within the triangle of primary wave X, intermediate wave (C) should be complete. Within intermediate wave (D), minor wave B may not move beyond the start of minor wave A below 1,160.75.

Intermediate wave (D) would most likely subdivide as a single zigzag. The subdivisions at the daily and hourly chart level for this wave count would be the same as for the first triangle wave count above; a zigzag unfolding higher would be labelled A-B-C.

This wave count may now expect choppy overlapping movement in an ever decreasing range for several more months.

Primary wave Y would most likely be a zigzag because primary wave X would be shallow; double zigzags normally have relatively shallow X waves.

Primary wave Y may also be a flat correction if cycle wave b is a double combination, but combinations normally have deep X waves. This would be less likely.

This wave count has good proportions and no problems in terms of subdivisions.

WEEKLY CHART – COMBINATION

Click chart to enlarge.

If cycle wave b is a combination, then the first structure in a double may be a complete zigzag labelled primary wave W.

The double may be joined by a three in the opposite direction, a zigzag labelled primary wave X.

The second structure in the double may be a flat correction labelled primary wave Y. My research on Gold so far has found that the most common two structures in a double combination are one zigzag and one flat correction. I have found only one instance where a triangle unfolded for wave Y. The most likely structure for wave Y would be a flat correction by a very wide margin, so that is what this wave count shall expect.

Within a flat correction for primary wave Y, the current downwards wave of intermediate wave (B) may be a double zigzag. Intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 1,147.34. Intermediate wave (B) may move beyond the start of intermediate wave (A) as in an expanded flat.

Because the minimum requirement for intermediate wave (B) is not yet met, this wave count requires that intermediate wave (B) continues lower. This is the most immediately bearish of all four weekly wave counts.

When intermediate wave (B) is complete, then intermediate wave (C) would be expected to make at least a slight new high above the end of intermediate wave (A) at 1,365.68 to avoid a truncation. Primary wave Y would be most likely to end about the same level as primary wave W at 1,374.91, so that the whole structure takes up time and moves price sideways, as that is the purpose of double combinations.

While double combinations are very common, triples are extremely rare. I have found no examples of triple combinations for Gold at daily chart time frames or higher back to 1976. When the second structure in a double is complete, then it is extremely likely (almost certain) that the whole correction is over.

DAILY CHART – COMBINATION

Click chart to enlarge.

Minor wave X may again be complete.

Minor wave Y may be underway for this wave count to continue lower to a minimum at 1,147.34. Minor wave Y may last a few weeks.

HOURLY CHART – COMBINATION

Click chart to enlarge.

If minor wave Y began at the last high, it may now have a complete five down for the new trend. This is labelled minuette wave (i).

Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,241.88.

A base channel is now drawn about minuette waves (i) and (ii). If minuette wave (ii) is over, then upwards movement may now find resistance about the upper edge of this base channel.

WEEKLY CHART – FLAT

Click chart to enlarge.

It is possible that cycle wave b may be a flat correction. Within a flat correction, primary wave B must retrace a minimum 0.9 length of primary wave A at 1,079.13 or below. Primary wave B may make a new low below the start of primary wave A at 1,046.27 as in an expanded flat correction.

Only a new low reasonably below 1,123.08 would provide reasonable confidence in this wave count.

Intermediate wave (C) must subdivide as a five wave structure; it may be unfolding as an impulse. Within intermediate wave (C), minor waves 1 through to 4 may be complete. If it continues further, then minor wave 4 may not move into minor wave 1 price territory above 1,307.09.

The blue channel is drawn using Elliott’s second technique. Minor wave 5 may end at support about the lower edge of this channel.

Minor wave 2 was a double zigzag lasting nine weeks. Minor wave 4 exhibits little alternation as a single zigzag and reasonable proportion lasting ten weeks.

TECHNICAL ANALYSIS

WEEKLY CHART

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

On Balance Volume has made a lower low than its prior low at the end of November 2015. This divergence is extremely bearish but does not rule out a consolidation unfolding here; the divergence does strongly support the Triangle wave count, which expects a consolidation or bounce up to test resistance now and then a continuation of a major bear market. It could also support the flat wave count that allows for a new low below 1,046.27 in coming months.

Last week completes a candlestick that may be a Hanging Man reversal pattern. However, the bullish implications of the long lower wick of a Hanging Man mean it requires bearish confirmation to be read as a reversal pattern, which essentially makes a Hanging Man a two candlestick reversal pattern. Prior to bearish confirmation, this candlestick should be read as bullish.

Upwards movement may now be a little limited as Stochastics is nearing overbought.

DAILY CHART

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

Price remains range bound with resistance about 1,240 to 1,245 and support about 1,220 to 1,215.

The downwards day of the 12th of October remains with the strongest volume so far within this consolidation. However, the next three strongest days are all upwards days. It may also be noted that upwards days have greater range within the consolidation.

The bearish signal today from On Balance Volume is weak because the trend line had only two anchor points and was not long held.

Expect price to swing from resistance to support and back again. The upwards swing may not be quite done; the last two downwards days lack range and volume, so this looks like a very small countertrend movement within an upwards swing.

GDX WEEKLY CHART

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

GDX had a large consolidation that lasted from January 2017 to August 2018. A downwards breakout below support at 20.80 in early August 2018 is highly significant. The breakout had support from volume, which adds confidence.

Upwards movement to the high last week now looks like a completed back test of resistance close to prior support at 20.80. The Evening doji star pattern indicates the bounce may be complete. The high last week at 20.51 is exactly the upper edge of the breakaway gap.

It would now be typical to see price move down and away. The target is at 16.02.

Last week price moved lower, but the candlestick closed green and the balance of volume was upwards. A lack of support from volume for upwards movement still supports the idea the bounce may be complete.

GDX DAILY CHART

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

Consider the bounce back up towards resistance at 20.80 now most likely complete.

However, if resistance at 19.75 can be overcome here, then the bounce may continue higher and may possibly move up to test 20.80.

Price is still unable to close above resistance, volume is weak, and Monday’s candlestick has a long upper wick. This looks bearish for the short term.

Published @ 06:44 p.m. EST.

—
Careful risk management protects your trading account(s).
Follow my two Golden Rules:

1. Always trade with stops.

2. Risk only 1-5% of equity on any one trade.