A continuation of downwards movement was expected for the short term. With the 0.382 Fibonacci ratio passed, the 0.618 Fibonacci ratio is a new target.

Summary: For the very short term, this pullback may end about 1,209. Thereafter, the upwards trend may resume.

The target for the short term is 1,295.

The final target for this bounce to end is 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 time, the Triangle wave count may again be slightly more likely.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART – TRIANGLE

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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 waves (A) and (B) may be complete. Intermediate wave (C) must subdivide as a five wave structure. Within intermediate wave (C), minor wave 2 may not move beyond the start of minor wave 1 below 1,181.06.

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.

When primary wave E is a complete three wave structure, then this wave count would expect a cycle degree trend change. Cycle wave c would most likely make new lows below the end of cycle wave a at 1,046.27 to avoid a truncation.

DAILY CHART – TRIANGLE

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

Primary wave E should subdivide as a zigzag. Intermediate waves (A) and (B) may now be complete. Intermediate wave (C) may have begun.

Minor wave 1 fits perfectly as a five wave impulse. Minor wave 2 may now be complete as a deep zigzag. Minor wave 3 may now exhibit an increase in upwards momentum, and it should have support from volume. The target for minor wave 3 expects it to exhibit a common Fibonacci ratio to minor wave 1.

Minor wave 3 may only subdivide as an impulse. Within minor wave 3, minute wave ii may not move beyond the start of minute wave i below 1,196.39.

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). It may last a total Fibonacci 21 or 34 weeks. So far it has lasted 13 weeks. Primary wave E may not move beyond the end of primary wave C above 1,365.68.

HOURLY CHART – TRIANGLE

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Minor wave 3 may only subdivide as an impulse. Within minor wave 3, minute wave i may be complete.

Minute wave ii is labelled as an expanded flat correction. Within the expanded flat, both minuette waves (a) and (b) now subdivide as completed threes. Minuette wave (c) has passed 1.618 the length of minuette wave (a). The next Fibonacci ratio in the sequence is used to calculate a target.

Minute wave ii may not move beyond the start of minute wave i below 1,196.39.

WEEKLY CHART – DOUBLE ZIGZAG

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It is 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 waves A and B may be complete. Minor wave C must subdivide as a five wave structure. Within minor wave C, minute wave ii may not move beyond the start of minute wave i below 1,181.06.

Intermediate wave (D) would most likely subdivide as a single zigzag.

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

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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

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Minor wave X may 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.

A new low below 1,196.39 would provide confidence in this wave count.

Within minor wave Y, minute wave a would be an incomplete five wave impulse. Within minute wave a, minuette waves (i) and (ii) may be complete. Minuette wave (iii) may only subdivide as an impulse.

Within minuette wave (iii), subminuette wave i may be complete. Subminuette wave ii may not move beyond the start of subminuette wave i above 1,236.89.

HOURLY CHART – COMBINATION

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This wave count now sees a series of four overlapping first and second waves to begin minute wave a. This wave count now expects a strong increase in downwards momentum.

Sub-micro wave (2) may not move beyond the start of sub-micro wave (1) above 1,224.71.

WEEKLY CHART – FLAT

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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. Within minor wave 5, no second wave correction may move beyond its start above 1,241.88.

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.

The start of this weekly candlestick is now overshooting the blue Elliott channel drawn about intermediate wave (C). If intermediate wave (C) is continuing lower, then this channel should not be breached by upwards movement. This wave count no longer looks right.

TECHNICAL ANALYSIS

WEEKLY CHART

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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 a small green doji does not change this analysis, and is to be expected for a short and quiet trading week in which the US had a day and a half of holiday.

DAILY CHART

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Gold may be within a larger consolidation with resistance about 1,240 – 1,245 and support about 1,195 – 1,183. Price is swinging from resistance to support and back again, with Stochastics reaching overbought when price reached resistance and oversold when price reached support.

Currently, price is bouncing up off support which was found about 1,195. Look for overall upwards movement to continue towards 1,240 – 1,245 and only stop when Stochastics reaches overbought. Do not expect price to move in a straight line.

For the short term, support about 1,220 has given way; next support about 1,215 is so far holding. Volume suggests more downwards movement here. Look for next support about 1,183.

GDX WEEKLY CHART

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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.

The target is at 16.02.

GDX DAILY CHART

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At the daily chart level, price is now within a consolidation that is bound by resistance above at 20.50 and support below at 18.14. It is the upwards day of the 11th of October that has strongest volume during this consolidation, suggesting an upwards breakout may be more likely than downwards. This technique does not always work, but it does work more often than it fails.

However, if price does break above 20.50, then it would be extremely likely to find very strong resistance just above at 20.80 and halt there. At a higher time frame that would look like a classic back test of resistance at prior support, identified on the weekly chart. If price does behave like that, it would offer a high probability low risk set up for a short position on GDX that may be held for the long term.

For the short term, support from volume today for downwards movement suggests more downwards movement tomorrow. Look for support about 18.14.

Published @ 07:48 p.m. EST.

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