Price still remains within an identified consolidation zone. Friday’s strong upwards day lacks support from volume. The breakout from a flag pattern is suspicious.

Summary: A new high above 1,325.74 is required for confidence that the upwards trend remains. The target would be at 1,341.

A new low below 1,300 would indicate a high may be in place.

Some indication of a trend change is seen by a weak bearish engulfing reversal pattern and closure of the last gap.

For reasonable confidence in a trend change the remaining things may be seen:

1. A new low below 1,302.62.

2. A breach of the blue channel on the daily chart.

Once a trend change is indicated, then a new wave down to last years may be expected to make new lows below 1,046.27.

New updates to this analysis are in bold.

Grand SuperCycle analysis is here.

Last historic analysis with monthly charts is here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART – TRIANGLE

Click chart to enlarge.

Cycle wave b may be a complete regular contracting triangle. If it continues further, then 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.

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 looks like it is unfolding as a single zigzag.

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.

This wave count would now 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.

It is possible now that primary wave E could have been over the last high. Some reasonable weakness should be expected at its end. Triangles often end with declining ATR, weak momentum and weak volume.

If this weekly wave count is correct, then cycle wave c downwards should develop strength, ATR should show some increase, and MACD should exhibit an increase in downwards momentum.

DAILY CHART – TRIANGLE

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Primary wave E should subdivide as a zigzag. Intermediate waves (A) and (B) may now be complete. Intermediate wave (C) may be complete, but as yet there is no confidence in a high.

It is now possible to see minor wave 5 complete at the daily and hourly chart level. However, it is always safest to assume the trend remains the same until proven otherwise. For reasonable confidence in a trend change the remaining two things need to be seen:

1. A new low below support at 1,300.

2. A breach of the blue channel.

If this wave count is invalidated, then the alternate below may be used.

HOURLY CHART

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It is possible that minute wave i may have been over at the last low. This movement is labelled as a five wave impulse.

Minute wave ii may be a complete double combination.

A target is calculated for minute wave iii which expects the most common Fibonacci ratio to minute wave i.

If minute wave ii continues any further, then it may not move beyond the start of minute wave i above 1,325.74.

DAILY CHART – TRIANGLE – ALTERNATE

Click chart to enlarge.

It is also possible that intermediate wave (C) is incomplete and requires a final high; the last high may have been minor wave 3 and not minor wave 5.

Fibonacci ratios within intermediate wave (C) are given for minor degree waves, and Fibonacci ratios within minor wave 3 are given. Although there is very little difference, the main wave count has slightly better ratios than this alternate.

The Elliott channel is drawn here about intermediate wave (C). Minor wave 5 may find resistance about the upper edge.

A target is calculated for minor wave 5 that would see primary wave E end prior to the invalidation point.

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 iv should now be over. Within minute wave v, no second wave correction may move beyond its start below 1,276.84.

Intermediate wave (D) would most likely subdivide as a single zigzag. Intermediate wave (D) should end at the upper (B)-(D) trend line for this wave count, so that the triangle adheres neatly to this trend line. That price point is about 1,352. This wave count now requires upwards movement to continue. It would not be acceptable for the upper (B)-(D) trend line to have breaches or substantial overshoots. Elliott wave triangles almost always adhere very neatly to their trend lines.

Intermediate wave E should continue to exhibit weakness: ATR should continue to show a steady decline, and MACD may begin to hover about zero.

This wave count may now expect choppy overlapping movement in an ever decreasing range for a few 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 – ALTERNATE BULLISH

Click chart to enlarge.

Because the preferred wave count is at a critical juncture in expecting a cycle degree trend change, it is time to consider an alternate which expects the continuation of the current upwards trend.

It is possible that the low in December 2015 was the end of a bear market and that Gold has been in a basing action for the past three years. Downwards movement to that low will subdivide as a double zigzag, a corrective structure.

If Gold is in a new bull market, then it should begin with a five wave structure upwards on the weekly chart. However, the biggest problem with this wave count is the structure labelled cycle wave I because this wave count must see it as a five wave structure, but it looks more like a three wave structure.

Commodities often exhibit swift strong fifth waves that force the fourth wave corrections coming just prior to be more brief and shallow than their counterpart second waves. It is unusual for a commodity to exhibit a quick second wave and a more time consuming fourth wave, and this is how cycle wave I is labelled. The probability of this wave count is low due to this problem.

Cycle wave II subdivides well as a double combination: zigzag – X – expanded flat.

Cycle wave III may have begun. Within cycle wave III, primary wave 1 may be an incomplete impulse. Within primary wave 1, intermediate wave (4) may not move into intermediate wave (1) price territory below 1,201.14.

A black Elliott channel is drawn about primary wave 1. Intermediate wave (4) may find support about the lower edge.

Cycle wave III so far for this wave count would have been underway now for 25 weeks. It should be beginning to exhibit some support from volume, increase in upwards momentum and increasing ATR. However, volume continues to decline, ATR continues to decline and is very low, and momentum is weak in comparison to cycle wave I. This wave count lacks support from classic technical analysis.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Strong support about 1,300 continues. For the short term, the last two weeks look like a small consolidation within the ongoing upwards trend.

With the trend extreme at this time frame, upward movement may be limited.

DAILY CHART

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

Friday closed above the upper trend line of the flag without support from volume, so this upwards breakout is suspicious. Upwards breakouts require support from volume for confidence.

A target using the flag pole would be at 1,375.

GDX WEEKLY CHART

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

A downwards week closes green and the balance of volume is upwards. Upwards movement within the last week lacks support from volume.

ADX indicates an upwards trend. RSI indicates there is room for price to continue higher. Next resistance is about 23.0, and there is strong resistance above about 25.5.

GDX DAILY CHART

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

For the short term, GDX is noticeably more bullish than Gold. The upwards breakout from its flag pattern has a little support from volume, and Friday’s candlestick has a bullish long lower wick and an almost shaven head.

The target from the last flag pattern is calculated at 24.65.

Published @ 01:08 a.m. EST on February 16, 2019.

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